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Chapter10 - Coggle Diagram

- - - - market penetration – increasing market share in existing markets utilizing existing products;
      - market development – entering new markets and segments using existing products;
      - product development – developing new products to serve existing markets;
      - diversification – developing new products to serve new markets.
  - - - ● the existing market has growth potential;
      - other competitors are leaving the market;
      - the organization can take advantage of its acquired experience and knowledge in the market; and
      - the organization is unable for some reason (such as lack of resources or regulatory restrictions) to enter
        new markets.
  - - - the existing market has no growth potential;
      - regulatory or other restrictions prevent an increase in an organization’s market share in its current
        market;
      - other geographic markets or market segments offer good growth potential; and
      - existing products are easily transferable.
  - - - an organization already holds a high share of the market and could strengthen its position by the launch of new products;
      - the existing market has good potential for growth providing opportunities of good economic returns
        for new product launches;
      - customer preferences are changing and they are receptive to new product ideas or new destinations; and
      - competitors have already launched their own new products
    - - have a market focus;
      - ● build on existing core competencies;
      - ● involve cross disciplinary teams in their development; and
      - ● involve good internal communications so that all within the organization are kept informed.
  - - - has current products and markets which no longer provide an acceptable financial return;
      - has underutilized resources and competencies;
      - wishes to broaden its portfolio of business interests across more than one product/market segment;
      - wishes to make greater use of any existing distribution systems in place, thus diluting fixed costs and
        increasing returns;
      - wants to derive the benefits of economies of scope;
      - wants to spread risks; and
      - has a need to even out the cyclical effects in a given sector.
  - - - Turnaround – Emphasizes the improvement in operational efficiency when an organization has problems
        which whilst serious are not critical
      - Captive company – Involves giving up independence in return for security whereby management offers
        the company to one of its largest customers to ensure survival.
      - Sell out/divestment (see also strategic methods chapter) – If an organization or SBU is in a weak competitive position it may choose to retrench through selling the entire organization or divesting those SBUs that are in a weak position in order to provide finance for those that are stronger.
      - Bankruptcy/liquidation – Occurs when the organization finds itself in a very poor competitive position with few prospects. Bankruptcy (sometimes called administration) involves giving up the management of the company to the courts in return for some settlement of the corporation’s obligations.
- - - - Durability – No advantage is sustainable for ever, as competitors will seek to imitate it
      - Transparency – The harder it is for outsiders to understand how an organization does what it does the
        harder it will be for imitators.
      - Replicability – Once a rival has understood the competencies needed to copy a rival, they will need to
        obtain the resources necessary to replicate the rival’s product.
- - - - Differentiation – creating a customer perception that a product is superior to those of competitors so that a premium price can be charged.
      - Cost leadership – being the lowest-cost producer of a product so that above-average profits are earned even though the price charged is not above average.
      - Focus – utilizing either a differentiation or cost leadership strategy in a narrow profile of market segments (possibly just one segment).
    - - Should the strategy be one of differentiation or cost leadership?
      - Should the scope of the strategy be broad or narrow?
    - - differentiating its products and services and selling them at a premium price; or
      - producing its products and services at a lower cost than its competitors.
  - - - Can earn higher profits by charging a price equal to or even below that of competitors because its costs
        are lower.
      - Provides the possibility of increasing both sales and market share by reducing price below that charged
        by competitors (assuming that the product’s demand is price elastic in nature).
      - Allows the possibility to enter a new market by charging a lower price than competitors.
      - Can be particularly valuable in a market where consumers are price sensitive.
      - Creates an additional barrier to entry for organizations wishing to enter the industry
  - - - its products will command a premium price;
      - demand for its product will be less price elastic than demand for competitors’ products;
      - above-average profits can be earned;
      - it creates an additional barrier to entry to new businesses wishing to enter the industry.
    - - Creating products which are superior to competitors by virtue of design, technology, performance, etc.
      - Offering a superior level of service.
      - Having access to superior distribution channels.
      - Creating a strong brand name through design, innovation, advertising, loyalty programs and public
        relations.
      - Distinctive or superior product promotion.
  - - - requires a lower investment in resources compared to a strategy aimed at an entire market;
      - allows specialization and greater knowledge of the segment being served; and
      - makes entry to a new market simpler and less costly.
    - - identification of a suitable target customer group which form a distinct market segment;
      - ● identification of the specific needs of that group;
      - ● establishing that the segment is sufficiently large to sustain the business;
      - ● establishing the extent of competition within the segment;
      - ● production of products to meet the specific needs of that group; and
      - ● deciding whether to operate a differentiation or cost leadership strategy within the market segment.
    - - Focusing on a particular group of buyers.
      - Specializing in particular geographic destinations.
      - Catering for the benefits sought by a particular group of buyers or a particular product.
- - - - Core competencies are the collective learning of the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies
      - A core competence should:
        
        equip a business with the ability to enter and successfully compete in several markets;
        
        add greater perceived customer value to the business’s products and services than that perceived in
        competitor’s products; and
        
        be difficult for competitors to imitate
    - - distinctive capability results from one or more of the following sources.
        
        Architecture – The unique network of internal and external relationships of an organization which produces superior performance. These can be unique relationships with suppliers, distributors or customers which competitors do not possess. Equally, the unique relationships may be internal to the business and based upon the way that it organizes its activities in the value chain.
        
        Reputation – This stems from several sources including superior product quality, characteristics, design,
        service and so on.
        
        Innovation – The ability of the business to get ahead and stay ahead of competitors depends upon its success in researching, designing, developing and marketing new products. Equally it depends upon the ability of the business to improve the design and organization of its value-adding activities.
        
        Strategic assets – Businesses can also obtain competitive advantage from assets like natural monopoly,
        patents and copyrights which restrict competition.
- - - - Determining the strategic direction of the organization
      - Once this decision has been made then decisions must be made on the strategic methods to be employed
        in following the chosen strategic direction