Exam 4: Business-Level Strategy

Case Scenario : Abrahamson's Jewelers. Through its sole location in an affluent suburb of San Francisco, Abrahamson's Jewelers has established a strong niche market in the upscale jewelry store segment. Abrahamson's was founded in 1871 and is currently owned and operated by John Wickersham, who bought the firm from its namesake founders in 1985. Wickersham joined the firm as a trainee out of high school, completed his gemology training, and several years later took ownership with the financial help of his parents. That debt has long been paid off and business has thrived. When he first acquired the business, Abrahamson's offered a full range of jewelry and gift items from watches to wedding sets to silverware to clocks. This broad range of products was mirrored by a broad price range-$10,000 Rolex watches were sold next to $50 Seiko watches. While some jewelry was custom designed and manufactured, most of the products were "case ready," meaning they were sourced from large jewelry and silver manufacturers from around the world. Over the last 15 years, Wickersham has narrowed the company's product offering considerably to focus only on high-end watches like Rolex and Piaget, custom jewelry, and estate jewelry. Wickersham stresses that this is an appropriate focus for his business since each of the products lends itself to relationship selling, and price rarely comes into the discussion. Despite the narrower offering moreover, Abrahamson's floor space has doubled, and clients are intensely loyal to the good taste, design skills, and personal service level provided by Mr. Wickersham. -(Refer to the above Case Scenario) What generic business strategy best describes Abrahamson's? Why?

The differentiation strategy can be effective in controlling the power of rivalry with existing competitors in an industry because

The activities in the value chains of companies using focus strategies are quite different than the activities in the value chains of companies using industry-wide business strategies.

A business-level strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage in specific product markets.

One of the benefits of the integrated cost leadership/differentiation strategy is that it is less risky than either the cost leadership or differentiation strategies.

Business-level strategies are concerned specifically with

Strategic fit among many activities (in an activity map) is fundamental to

Because of its focus on innovation and quality manufacturing, Total Quality Management is not useful for firms which follow a cost leadership strategy.

The three dimensions of a firm's relationships with customers include all the following EXCEPT

A flexible manufacturing system is

The focused differentiation strategy differs from the differentiation strategy in that

Describe the advantages of integrating cost leadership and differentiation strategies.

Business-level strategies detail commitments and actions taken to provide value to customers and gain competitive advantage by exploiting core competencies in

According to the Chapter 4 Opening Case, part of Starbucks' success in 2011 was the decision to cease introducing new products and to discontinue international expansion in order to focus on reinvigorating its primary brand - the Starbuck's coffee house.

Although it is a cost leader, IKEA also offers differentiated features that appeal to its target customers, including its unique furniture designs, in-store playrooms for children, wheelchairs for customer use, and extended hours.

Firms use the integrated cost leadership/differentiation strategy because

Case Scenario : International Cow Packers. International Cow Packers (ICP) is a $12 billion meat processor (slaughter, processing, and packing). Founded in 1943, ICP has grown to become the largest beef and pork processor in the United States (revenues come 90% from beef and 10% from pork) and also has a growing export market to Japan. The company follows a focused cost-leadership strategy, delivering USDA-graded meats primarily to the institutional (schools, prisons, hospitals) and supermarket channels. ICP's entire value chain is organized to deliver volume product at the industry's lowest per-unit cost. Its supplier industries, primarily cattle and swine feedlots, have relatively little power since prices for these raw materials are determined in the commodity markets. While entry barriers to the industry are high due to high minimum start-up costs, industry rivalry is extremely intense - primarily due to the fact that three large companies (including ICP) control 80% of the market for processed meats. The threat of substitutes is high with an increasing trend for consumers to favor poultry and other non-beef proteins. Buyers are also powerful since supermarkets are relatively concentrated at a regional level and end-consumers have ample choices. -(Refer to the above Case Scenario) What risks is ICP accepting by adopting its focused low-cost strategy?

The Li Ning Company's move from a cost leadership strategy to an integrated cost leadership/differentation strategy in the sportswear industry was so successful in China that both Nike and Adidas exited the Chinese market (Chapter 4 Strategic Focus).

Effective use of the generic business strategies allows the firm to favorably position itself relative to the five forces.

Companies without the core competencies in their value chain activities and and support functions are still able to implement successfully a either a cost leadership or a differentiation strategy, although they cannot implement an integrated cost leadership/differentiation strategy.