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Related Flashcards
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Cards In This Set
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Two large categories of strategic choices:
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Business-level strategies
Corporate-level strategies
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Business-level Strategies
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Actions firms take to gain competitive advantages in a single market or industry
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Corporate-level Strategies
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Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously
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Two Business-Level Strategies are AKA and they are:
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Generic Business Strategies:
Cost Leadership
Product Differentiation
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Cost Leadership Business Strategy
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Focuses on gaining advantages by reducing its costs to below those of all its competitors
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Product Attributes Usually Emphasized by Cost Leadership Strategies
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Reliability
Low Prices
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Important sources of Cost Advantages for Firms
1-3
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1. Size differences and Econ/Disecon of Scale
2. Experience differences +learning-curve econ
3.Differential low-cost access to produc. inputs*
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Important Sources of Cost Advantages for Firms 4-5
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4. Technological advantages independent of scale
5. Policy Changes
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Size Differences and Economies of Scale
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Exist when the increase in firm size is associated with lower costs
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Reasons that increasing the volume of production can reduce a firm's costs
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1. Volume of Production and Specialized Machines
2. V. of Production and the cost of plant and equip.
3.V. of P. and Employee Specialization,..OHcosts
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Size Differences and Diseconomies of Scale
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Can actually increase costs if firms grow too large.
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Important Sources of Diseconomies of Scale
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Physical limits to efficient size, managerial diseconomies, worker de-motivation, distance to markets and suppliers
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Experience Differences and Learning-Curve Economies
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Depends on their cumulative levels of production, the one with the greatest experience in manufacturing will have the lowest costs
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Learning Curve and...
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LC. and Economies of Scale
LC. and Cost Advantages
LC. and Competitive Advantage.
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1st Difference between Economies of Scale and Learning Curves
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Economies of Scale focuses on the relationship between the volume of production at a given point in time and average unit costs, the Lc cum. vp.
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