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MNGT 4800 Chapter 6 and 7 notes

by: Peyton Oglesby

MNGT 4800 Chapter 6 and 7 notes MNGT 4800

Marketplace > Auburn University > Business, management > MNGT 4800 > MNGT 4800 Chapter 6 and 7 notes
Peyton Oglesby
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Chapter 6 and 7 notes that will be on exam 2 February 18th
Strategic Management (Section 009)
Dr. Peter Stanwick
Class Notes
MNGT 4800, chapter 6, chapter 7, notes, Exam 2
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This 4 page Class Notes was uploaded by Peyton Oglesby on Sunday February 14, 2016. The Class Notes belongs to MNGT 4800 at Auburn University taught by Dr. Peter Stanwick in Spring 2016. Since its upload, it has received 27 views. For similar materials see Strategic Management (Section 009) in Business, management at Auburn University.


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Date Created: 02/14/16
MNGT 4800 Chapter 6 Business-Level Strategy How to compete for advantage:  Who? - Which consumer segments are we going to serve?  What? - Desires, wishes, and needs do we aim to satisfy?  Why? - Do we want to satisfy said consumers needs/wants?  How? - Do we plan to satisfy the needs/desires? Strategic Position How to compete-two primary competitive levers:  Value  Cost (V-C) Economic Value Created  The greater the economic value created the better the competitive advantage Strategic Trade-offs  Higher value means higher cost  Value Gap= Value Creation-Costs Generic business strategies Differentiation  HIGHer value and unique features Cost-Leadership  Comparable value and lower cost Scope of Competition  Narrowly focused  Broad focus Value drivers that increase value and decrease cost  Unique product features  Superb customer service  Customization options  Complements Advantage of “Big Box” retailers  Maximizing scale and inventory lowers costs Cost Drivers Learning Curves  Learning by preforming  As a company gets older they get the benefits of the learning curve Experience Curves  As a company progresses it gets larger and there are more economies of scale Integration Strategy Cost leadership AND differentiation  Trade-offs between differentiation & low cost  Value & Cost Drivers of Integration o Economies of scope o Quality o Structure, culture, & routines o Innovation Corporate Level Integration Strategy  Creates a competitive advantage by beating rivals on product features while offering a better price o Better price doesn’t mean lowest price, better price means relative to the value you’re offering MNGT 4800 Chapter 7 Competition is driven by innovation  Invention is DISCOVERY of new products or ideas  Innovation is the COMMERCIALIZATION of an invention Three concepts that create innovation:  Novel  Useful  Implementation Four Stages of industry development 1. Introduction a. Few innovators in the market 2. Growth stage a. Early majority buyers increase growth b. Skills move to manufacturing and marketing c. Efficient and inefficient thrive 3. Maturity a. Oligopoly is dominant industry structure during this stage b. Late majority buyers are more limited market growth c. Cost leadership companies tend to drive the industry 4. Decline a. Laggards are buyers and market size shrinks b. Excess industry capacity and 4 strategic options i. Consolidate-buy rivals ii. Maintain-stay and continue marketing iii. Harvest-stay with limited investments iv. Exit-inefficient firms get out of the industry Strategic entrepreneurship  “Entrepreneurs are the change agents for creative destruction” o Create and exploit new opportunities Different types of innovation  Incremental- steady improvement of a product or service  Radical- novel methods or materials serving new markets o This is often new firms  Architectural-reconfigure and redesign known features to create new markets  Disruptive-novel technologies serving existing markets Periods of paradigm change  Discontinuities--These are periods when underlying standards change o Paradigm shift o Incumbents need “absorptive capacity” o Discontinuity examples:  Music records to CDs to MP3  Cameras film to digital  Airplanes propellers to jets Hyper-competition- no single strategy maintains competitive advantage  MUST be a sequence of short-term advantages  Some critics don’t agree on the cause of hyper-competition, imitation v. differentiation “Hardball” Strategies  Destroy rivals’ profit sanctuaries o Flood the market with advertising or making price cuts  Plagiarize “with pride” o Steal inventions that are not patent protected  Mislead the competition  Unleash enormous and overwhelming force o Focused, direct, and swift force


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