Answer: Firm's core competencies. characterized as central to the creation of perceived value in products and inimitable due to path-dependence.
1. overestimate its abilities or the uniqueness of its abilities
2. underestimates the number of competencies required for success in the new market
3. overestimates the transferability of its assets from current business to the new market
4. overestimates the relevance of its current competitive advantage to the new market (e.g. gerber - brand name in baby food vs brand name in daycare)
Answer: Opportunities need to be ATTRACTIVE, EXPLOITABLE and DEFENSIBLE. --> seemingly obvious adjacencies may be difficult to exploit.
Answer: The suggestion that firms should diversify incrementally by moving into adjacent spaces. this is a variant on the idea that firms should stick to what they know best, but allows for movement outside the core business.
Answer: TRADITIONAL ATTRACTIVENESS CRITERIA that affect current and future profitability in the new market (market size, growth rate, competitive intensity). these should be assessed by the firm as part of the decision process
1. same product, new market (location, channel or segment)
2. technologically related products for new customers (firm knows what it does)
3. tech unrelated product for current customers (firm knows its customers)
4. Unrelated products for new customers (firm knows nothing)
PS is related to differentiation and the value proposition but exists at the more specific level of marketing.
Answer: physical uniqueness, path dependency (length of time it took to produce product), causal ambiguity (difficulty to figure out), economic deterrence (cost to copy)
Answer: Inimitability (can it be copied), appropriability (who owns it), substitutability (is there a substitute advantage)
Answer: Competitive advantage is achieved through the resources, assets, and skills possessed by a firm. Firms with assets that are valuable in a particular context are more likely to succeed.
Answer: Good strategy consists of interlocked activities rather than being a collection of parts. The best combinations enhance uniqueness and amplify tradeoffs. Ideally, activities are: CONSISTENT, REINFORCING, DIFFICULT TO DISENTANGLE. harder for competitors to match an interlocked combination of activities than replicate an individual activity.
Answer: Valuable positions will attract imitators and therefore must be accompanied by tradeoffs. Tradeoffs occur when activities are incompatible.
Answer: strategic positioning, tradeoffs, fit
OE and strategy operate in different ways. OE is performing similar activities better than the competition is performing them. It is better utilization of inputs. Strategy is performing different activities from competitors or performing similar activities in different ways. Long term advantage is obtained only by performing differently (creating greater value or creating comparable value at lower cost) from the competition.
VARIETY-BASED POSITIONING -- produce a subset of an industry's products or services. economically feasible only when a firm can best produce products or services using distinct sets of activities
NEEDS-BASED POSITIONING -- serves most or all of the needs of a particular group of consumers. based on segmenting consumers. arises when there are a group of customers with differing needs and when a tailored set of activities can serve those needs best.
Answer: in categories in which consumers enter and then leave (e.g. age-specific products) --> offense, even if category is mature
Answer: in new markets, buyers seek innovation and variety and are less loyal --> firms should focus on customer acquisition via innovation. in mature markets --> buyers seek less variety and are more loyal --> firms should focus on customer retention through deeper understanding of consumer needs and product refinement
SWITCHING BARRIERS make it undesirable for a customer to switch. however, switching costs that are obvious to the buyer prior to making a purchase may limit the firms offensive capabilities and some barriers may be eliminated through competition
INCREASE CUSTOMER SATISFACTION. but increasing customer satisfaction comes at a cost -- larger market share of consumers who are just moderately satisfied
INCREASE MARKET SHARE -- requires changes in consumer usage rate. difficult to achieve for non-leading brands
CAPTURE MARKET SHARE -- this is traditional strategy, especially in mature markets. however, it may be economically unwise to strive for additional share if the revenues achieved are lower than the cost of obtaining those revenues.
Answer: Offense (new customers) or defense (present customers)