Running Head: DISCUSSION BOARD 3
Rothaermel Exercise 3
Malcolm Evans
Liberty University
Summer 2016
Discussion Question 6.1
While a broad strategy may cover many different products or services, they are lacking
that specialized product that stands out when compared to the rest. Due to this the company will
never be able to achieve a competitive advantage over their competitors because they are not
focusing on the core competencies. Not only will they miss out on having a competitive
advantage they will also place themselves in a position to drain the company financially as costs
could rise for having so many different products and services. When the costs increase, and the
value does not increase as well, customers will jump ship and go with another supplier if there
are suitable substitutes available.
When it comes to a focused strategy, something that can prove problematic is that there
could be limited demand available within the segment. This could hinder company growth if the
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company is not looking to expand beyond their market, which will affect revenue. Also if a
small company is utilizing a focused strategy they are more susceptible of losing customers to a
larger client that enters the market servicing the same clientele, due to them having more
resources available.
Discussion Question 6.4
A firm using a cost leadership strategy would mostly likely follow a generic business
strategy, aiming to serve its customers by providing products and services at a cost lower than
that of their competitors. These companies should aim to sell their products or services at an
appropriate price in regards to their value. An example would be a shoe company that aims to
sell quality shoes at an inexpensive price, targeting customers by getting a good quality shoe at a
low price. At the same time these companies have to be able to combine low per unit profit with
large sales to earn a profit.
A company using product differentiation would seek to gain customers by providing a
product or service that is unique and stands out when compared to their competitors. For cereal
retailers looking to stand out in the market they would aim to gain customers by making the
product more appealing and personal-able to their customers. While getting the generic brand
versus name brand may not provide difference in taste, the marketing of the two is entirely
different.
Business level strategies detail actions taken to provide value to customers and gain a
competitive advantage by exploiting core competencies in specific, individual product or service
markets. A company using an integrated business level strategy would aim to provide their
customers with a product that is valuable while also being affordable, which Southwest airlines
use to gain their customers.
Discussion Question 7.1
In the introduction stage, early development is occurring where some product or service
is being developed, and a new industry is beginning to be formed. At this point it is mostly like a
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small company that is using a focused strategy to stress the uniqueness of the product or service
to a small group of people. Due to the amount of costs, the profits at this point are negative as not
many customers are involved yet.
In the growth phase, capital is still important, and the company is now using a
differentiated strategy in order to stand out compared to other competitors that are beginning to
enter the market. Production is becoming more standardized and the growth of the company
begins to curve upward.
At the maturity stage, growth begins to slow as more companies or late entrants enter the
game. At this point the firm is again finding ways to differentiate for other industry competitors.
They are competing on quality for other lower costs offering. At this point some companies may
try a low cost/low price strategy to increase the volume of sales and make profits from inventory
turnover
With everything declines are inevitable. If the product or service has not kept up with
competing offerings, sales will suffer and the life cycle will experience a decline. This is often
accompanied by another, larger shake-out in the industry as competitors who did not leave the
industry early on in the maturity stage, begin to exit the industry. At this point companies begin
to merge, to be competitive and grow.
Discussion Question 7.2
The example I chose to use would be Apple. They have been extremely innovative
throughout the course of product offerings. They have also been disruptive at times to create new
products for their company. To continue to be a global market leader they have to continually
challenge themselves to be innovative, radical, incremental, disruptive, and architectural. A
company that is able to evolve over time to meet the demands of their customers, is a company
that plans on being around for a while.
Discussion Question 7.4
One company that is able to compete using this model would be Comcast. In the
beginning Comcast often gave away their DVRs to subscribing customers. Even though the DVR
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was free, it was offset by a $19.95 installation fee, as well as a monthly subscription to use the
service that would eventually cover the costs of the device itself, and produce a profit.
Discussion Question 8.1
The decision for Wal-Mart to begin operating supercenters was a corporate level decision
to diversify. As businesses reach their maturity stage they have to look for ways to compete in
the market. By combining grocery and retail stores they aimed to combine two highly important
markets. Retail, and grocery stores and gain new customers as they provided a one stop shop,
where customers could get everything they needed in one store, as opposed to making numerous
stops at the different stores. This also would increase sales as customers begin to browse and
purchase items that they may not have if the convenience wasn’t there.
Discussion Question 9.1
Some of the advantages of the acquisition for Live Nation include the reduction in
competition in the market as they were buying out one of the competitors. This would lead to
lower costs that could be passed down to their customers. Through the acquisition there would be
an increase in differentiation, as well as an increase of access to new markets, and distribution
channels. One of the major reasons for the acquisition was so that Live Nation could have access
to Ticketmaster’s data regarding events and costumers to help with promotion. However this was
deemed illegal and Live Nation was not able to use the data to help their competitive advantage.
Discussion Question 10.3
I would agree with Professor Pankaj. I would have to agree that the world is not one vast
market, but many small, interconnected, discrete entities, with varying degrees of openness to
one another. There is so much that we would be able to learn from other countries and cultures
but due to ongoing conflict in the world, there is a lot that will are not able to learn about and
understand without the fear of violence. If indeed only 10 to 25 percent of economic activity is
international, than that right there says that we are not operating at our maximum level and there
is room for growth.
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