i should apply to the Boston Consulting Group after this
Don’t sweat it too much guys and gals…you will see one question on this at most…You will not see a whole case on this like in schweser… The question will probably be a two part answer like Company X and Y have following strategy with 2 answers for each M/C …you know which ones I am talking about …
This was annoying the hell out of me, too. I reduced the four generic strategies to the following and it helped me out. Not sure what buzzwords to look for, but I’m able to answer most of these questions correctly now. Cost Leadership - Goal: Be industry low-cost producer. *Depends on differentiation parity, so prices are relatively average while costs are lower. These firms tend to be above average performers. *This won’t work unless you’re the ONLY one doing it. Cost Focus - Goal: Cost Leadership in a sub-sector. *Comes at the cost of competitive advantage in other areas. Differentiation - Goal: Meeting specific needs of consumers. *Must attempt cost parity by reducing costs in areas not related to differentiation. *Profitable because prices charged are higher while costs are the same. *Multiple differentiation firms okay as long as they’re differentiating along different areas Differentiation Focus - Goal: Differentiation in sub-sector.
Thanks maile. Now I realize that I read the question incorrectly… .I thought they said that 75% of their production was purchased by 5 hospitals! WTF! I definitely need to read more slowly…
maile Wrote: ------------------------------------------------------- > over05 Wrote: > -------------------------------------------------- > ----- > > maile, how big a market share you need to have > to > > be a focus? 100%? 90%, if so is that > > differentiation not focus any more? > > > sorry for the delay, i was studying! > > for a focus company, my colleague said you would > look for the words that imply “exclusive”. The > target market has to be narrow enough that the > company can devote all their energies into > supplying that one market AND be able to charge a > premium to do so. > The example she gave was that prior to getting > into clothing Oakley was a focus company. > > so I gather that means 100% devoted to a target > market > > @ nattyg > “maile, can you expand on the Mock question. I > would have answered “differentiation focus” but > since it was not an option I went for “focus”. why > is it “differentation”? Thanks” > > As per above, Narrowness of target market makes it > focus, the Belle Cuisine example said the company > devoted about 75% of their production to supplying > hospitals. I can’t recall if it identified where > the other 25% of their time went but my colleague > said that gap indicates that their strategy is > just to differentiate themselves from other food > producers. I think there is differentiation focus for the food company question. The answer seems to indicate differentiation focus. It is the financial software company that is using differentiation strategy even though it says “focus”… . I think this question is same as the downgrade risk one. You should just choose the non-obvious one.
nattyg Wrote: ------------------------------------------------------- > Also, Is it fair to say that if 1 of Porter’s > competitive forces is not met, (e.g. entry > barriers are low, or rivalry among competitors is > high) then the industry is not attractive??? Can anyone expand on this and disptra’s question above?