AlexanderFrempong
BUSI 690
RothaemelAssignment2
Liberty University
RothaermelAssignment#2
Chapter6
Question6.1–Whataresomedrawbacksandriskstoabroadgenericbusinessstrategy? To a
focused strategy?
One major risk of using a broad generic business strategy is competing firms lowering
their cost hence reducing or eliminating the competitive advantage that was once enjoyed.
(Rothaermel,2013)Secondly,changesincustomerpreferenceanddemandaswellasavailability
ofsubstitutespose ariskforbothstrategies.There isalso the risk ofimitation, andfocusedfirms can
achieve a better differentiation in their market segment
Amajor drawback for the focused strategy is that the segment becomes very attractive,
leadingtoincreaseinrivalry,decreasingprofit.Alsoabroadmarketcostleadercaneasilyalterit product to
compete directly. Lastly, other focused strategy firms can develop a better serving
sub-segment
Question 6.4 – In chapter 4, we discussed the internal value chain activities a firm can
perform in its business model (see Exhibit 4.6). The value chain priorities can be quite
different from firms taking different business strategies.Createexamples of valuechains
forthreefirms:oneusingcostleadership,anotherusingdifferentiation,andathirdusing an
integration business-level strategy.
Cost leadership strategy is a business strategy that aims at providing product and services at a
lowercostwhilesgeneratingsimilarvalueforconsumers(Rothaermel,2013p.143).Increating value
chain cost, businesses can employ computers to conduct employee training, evaluation, and
other processes. This reduces the number of human personnel employed thus reducing the cost.
Computers can also be used to generate purchase orders and status report reducing the
amountofpaperprocessing.Thiswillreducefilingcostandmanualorderprocesscosts.Finally,
businesses can develop a better inventory management system through the use of computers.
Thiswillhelpreducethe amountofstorageforinventory.
Differentiation strategy is employed to provide consumers with unique products or
servicesinacosteffectiveway,whilecreatinghighvalue.(Rothaermel,2013,p.143)Firmscan employ
a marketing strategy that improves the order process, and convenience.Also firms can develop a
process that ensures high quality, faster and reliable services and product. This will increase
consumer satisfaction and also increase profit.
An integration business-level strategy is a hybrid of differentiation and cost leadership
strategies. Creating value chain with strategy can be done through the use of computers to
revolutionizetheorderprocessthusreducingcost,whilealsoincreasingconsumersatisfaction. Chapter
7
DiscussionQuestion7.1–Assumeyouworkforasmallfirmthatdevelopedabetterand
fasteroperating system fornetbooks than MicrosoftWindows.What strategy might the
firm use to unseat Windows in this market?
It is very vital for the company to understand innovation and have the ability to create a
paradigm shift. Paradigm shift is when a new technology transforms an industry, and becomes
the new standard in the long run. (Rothaermel 2013, p.189)Agreater takes effect in the market
when innovation creates discontinuity in the industry, and a firm uses it as a means to help
customersviewtheirproductasbetterinthemarketwhilesmaintainingandeffectivecost.When this
happens, the business should incorporate a strategy like the business-level, which enhances
quality, and keep cost down.
Question7.2–Howdoestheindustrylifecycleaffectbusinessstrategy?Detailyouranswer based
on each stage: introduction, growth maturity, and decline.
The industry life cycle goesthrough fourphases.These phasesare; introduction, growth,
maturity, and decline. (Rothaermel, 2013, p. 173) Each stage presents opportunities and threats
thatrequirethecompanieswithintheindustrytodevelopappropriatestrategies.Theintroduction phase
deals with developing new products and attracting new customers, thus a focus strategy will be
most appropriate in this phase. In the growth stage the product or service has gain grounds, and
the focus is on how better they are in comparison to their competitors. The focus approach will
help in this stage as well, because it will help in the marketing process. In the
maturityphase,lessmarketingorinnovationisneededbecausethefirmhasalargemarketshare, and the
company now enjoys brand loyalty from customers.Acost leadership strategy will be appropriate
for this stage, because the aim isto increase profit. Cost leadership strategy willalso be effective
in the decline stage.At this stage sales volume is low, so reducing the cost will be beneficial.
Question7.4–Whyarestandardsimportantinmanyindustries?Asstandardsgetadapted and
become dominate, how does this process influence the competitive nature of the industry?
Astandard is an “is an agreed upon solution about a common set of engineering features and
design choices.” (Rothaermel, 2013, p. 175) Standards are set in place normally in the growth
stage of the industry’s life cycle to ensure a product or service performs, as it is intended,
customers enjoy safety related to the product. Standards are setalso to make sure productsand
servicesarecompatiblewithotherproductandservices.Lastly,standardsallowafirmtoenjoy the large
market share and become competitive.
Chapter8
Question8.1–WhenWal-Martdecidedtoincorporategrocerystoresintosomelocations and
created “supercenters,” was this a business-level strategy of differentiation or a
corporate-level strategy of diversification? Why? Explain your answer.
The decision by Wal-Mart to incorporate grocery stores into some locations and create
supercenters is a corporate-level strategy.According to Rothaermel (2013), business-level
strategyofdifferentiationfocusesongainingandsustainingcompetitiveadvantageinasingle
productmarket.(p.202)Ontheotherhandcorporate-levelstrategyofdiversificationhastodo
withseniormanagementdecisions,andactiontakingsimultaneouslyinpursuitofcompetitive
advantage in the in several industries and markets (Rothaermel, 2013, p. 203).The decision
seeks expands and diversify the operations Wal-Mart, thus makes it more competitive.
Chapter9
Question 9.1 – Horizontal integration has benefits to the firms involved. Consider the
consolidationintheeventpromotionbusinesswhenLiveNationboughtTicketmasterin 2010. List
some specific advantages of this acquisition for Live Nation. Do you see any downside to the
merger?
Horizontalintegrationis“theprocessofacquiringandmergingwithcompetitors,leading to
industry consolidation.” (Rothaermel, 2013, p. 239) Horizontal integration allows companies to
access new channels, enjoy a less competition, and increase differentiation. Consumers also
enjoy lower cost and have more options.(Rothermel, 2013, p. 242)Acquisition provide the
businesses involved a competitive advantage in the market, because of the pulling together of
resourcesofthecompaniesinvolved.Notwithstandingthebenefit,acquisitioncandestroy shareholders’
value (Rothaermel, 2013, p. 242)
Chapter10
Discussion Question 10.1 – Multinational enterprise (MNEs) have an impact far beyond
theirfirmboundaries.Assumeyouareworkingforasmallfirmthatsuppliesaproductor service
to an MNE. How might your relationship change as the MNE moves from Globalization
2.0 to Globalization 3.0 operations?
Multinational enterprises stated to form smaller self-sufficient entities, which had all the
businessesfunctioninfewkeycountriesduringglobalization2.0.(Rothaermel,2013,p.273)On the
other hand globalization 3.0 is where Multinational enterprises can “freely locate business
functions anywhere in the world based on optimal mix of costs, capabilities, and PESTEL
factors.” (Rothaermel, 2013, p. 273)As company’s move from globalization 2.0 to 3.0 they will
be looking to lower manufacturing services and labor cost. The trade off is that business must
offer and produce quality services and products.
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Reference:
Rothaermel,F.(2013).Strategicmanagement:Concepts&cases.NewYork:McGraw-Hill Irwin.
