Business Strategy Flashcards

Flashcards based on lecture notes on business strategy concepts such as Porter's Five Forces, generic strategies, diversification, and integration.

Which of Porter's forces is most affected by high customer switching costs?

Threat of new entrants

A patent-protected drug reduces which of Porter's forces?

Threat of new entrants

If a market has low barriers to entry, which force is strongest?

Threat of new entrants

Which force weakens when a product has no close substitutes?

Threat of substitutes

A company with strong supplier relationships mitigates which force?

Bargaining power of suppliers

Which force explains price wars in an industry?

Competitive rivalry

Loyalty programs reduce which of Porter's forces?

Bargaining power of buyers

If raw materials are scarce, which force strengthens?

Bargaining power of suppliers

A monopoly has weak…

Competitive rivalry

Which force is most relevant when analyzing streaming services vs. cable TV?

Threat of substitutes

A company like Dollar Shave Club (low-cost razors) follows:

Broad cost leadership

Apple's iPhone (premium pricing, innovation) aligns with:

Broad differentiation

Which strategy risks being 'stuck in the middle'?

Trying to be both low-cost and differentiated

A local organic farm selling high-priced produce to gourmet stores uses:

Focused differentiation

Which strategy requires heavy investment in R&D?

Differentiation

Ryanair's budget flights target price-sensitive travelers. This is:

Focused cost leadership

A failure in differentiation strategy often results from:

Lack of perceived uniqueness

Which generic strategy is most vulnerable to imitation?

Differentiation

A company competing on both price and uniqueness risks:

Being 'stuck in the middle'

Tesla's electric vehicles initially targeted:

Early adopters

Focused differentiation

A strategy that targets a specific market segment with unique products.

Broad differentiation

A strategy that aims to offer unique products to a wide market.

Focused cost leadership

A strategy that targets a specific market segment while maintaining the lowest cost.

Broad cost leadership

A strategy that aims to be the lowest cost producer in the industry across a wide market.

Cost leadership

A strategy focused on being the lowest cost producer in the industry.

Differentiation

A strategy that focuses on offering unique products or services.

Commoditized products

Products that are indistinguishable from others and compete mainly on price.

Ambiance competition

A strategy where a business competes based on the atmosphere and experience it provides.

Diversification

A strategy that involves entering into new markets or industries.

Related diversification

A strategy that involves expanding into products or markets that are related to the existing business.

Unrelated diversification

A strategy that involves entering into markets or products that are not related to the existing business.

Vertical integration

A strategy where a company expands its operations into different stages of production.

Horizontal integration

A strategy that involves merging with or acquiring competitors.

Economies of scope

Cost advantages that result from a company producing multiple products.

Economies of scale

Cost advantages that result from producing goods in large quantities.

Synergy

The combined effect that is greater than the sum of individual effects.

Risk reduction

The strategy of minimizing potential losses by diversifying investments.

Customer base

The group of customers who repeatedly purchase the goods or services of a business.

Resource sharing

Utilizing the same resources across different products or markets.

Industry expertise

Knowledge and skills specific to a particular industry.

Supply chains

The entire system of production, processing, and distribution of goods.

The threat of new entrants is high when barriers to entry are low. T/F

True

Bargaining power of suppliers is weak when there are many alternative suppliers. T/F

True

Competitive rivalry decreases when there are many competitors in an industry. T/F

False (It increases)

Customer loyalty programs strengthen the bargaining power of buyers. T/F

False (They weaken it)

A patent-protected product reduces the threat of substitutes. T/F

False (It reduces the threat of new entrants, not substitutes)

Broad cost leadership focuses on offering unique features to a wide market. T/F

False (It focuses on low prices, not uniqueness)

Focused differentiation targets a niche market with premium products. T/F

True

A company can successfully pursue both cost leadership and differentiation simultaneously. T/F

False (Risks being "stuck in the middle")

Tesla's early strategy of targeting luxury EV buyers is an example of focused differentiation. T/F

True

Operational efficiency is more critical for differentiation than cost leadership. T/F

False (It's critical for cost leadership)

Related diversification leverages shared resources across similar products. T/F

True

Unrelated diversification is riskier than related diversification. T/F

False (It reduces risk by spreading investments across industries)

Disney's launch of Disney+ is an example of unrelated diversification. T/F

False (It's related—leveraging content expertise)

Economies of scope occur when a company produces multiple products at lower costs. T/F

True

A shampoo brand launching conditioner is an example of horizontal integration. T/F

False (It's related diversification)

Porter's Five Forces model ignores the impact of government regulations. T/F

True (It's an external factor not directly included)

A company using focused cost leadership competes on price in a niche market. T/F

True

Vertical integration is a type of diversification. T/F

False (It's about controlling supply chains, not diversification)

Apple's iPhone and MacBooks are examples of economies of scope. T/F

True (Shared tech/design resources)

"Stuck in the middle" refers to failing to implement any generic strategy. T/F

True