Business Policy & Strategy

2681 Words11 Pages
1. Define strategy. Explain the connection between a company’s strategy and its quest for sustainable competitive advantage. A company’s strategy is defined as its action plan for outperforming its competitors and achieving superior profitability. Strategy and a company’s quest for competitive advantage are tightly connected because crafting a strategy that yields a competitive advantage over rivals is the company’s most reliable means of achieving above-average profitability and financial performance. 2. Identify and briefly describe the four most frequently used strategic approaches to achieving a sustainable competitive advantage. Provide business examples of the four approaches. A. Striving to be the industry’s lost-cost provider, thereby aiming for a cost-based competitive advantage over rivals. * Wal-Mart and Southwest Airlines are good examples. They have earned strong market position because of the low-cost advantages they offer and their ability to underprice competitors. B. Outcompeting rivals on the basis of differentiating features, such as higher quality, wider product selection, added performance, value-added services, more attractive styling, and technological superiority. * Apple, Johnson & Johnson, Mercedes, BMW are all good examples. Their ability to meet customer needs more effectively than rivals has enabled them to gain a competitive advantage. This advantage drives up their customers’ willingness to pay higher prices for better quality products. C. Developing an advantage based on offering more value for the money. * Target is a good example of this strategy. Giving customers more value for their money by satisfying their expectations, while also beating their price expectations is known as a best-cost provider strategy. It is a combination of the two previous strategies above.
Open Document