Strategic Management Theory ch 5 two questions

Answer

1. 1.  

      Strategic Management Theory

      4. a. Lowering Costs through Functional-level Strategies and Organizational Arrangements

      Organizations can use various ways to lower costs through functional-level strategies and organizational arrangements when implementing business-level strategies.  One of the ways is by negotiating with suppliers to get better prices for inputs or producing their own inputs through backward integration. This will cut production costs. The other way is by employing highly qualified and experienced employees. This will increase efficiency and reduce the number of defective products.  The number of repeat works will also be reduced. As a result, customer loyalty and demand will increase, thereby enabling the organizations to achieve economies of scale, which will, in turn, reduce the unit cost of producing a product or service.

      4 b. Improving Differentiation through Functional-level Strategies and             Organizational Arrangements

      Organizations can improve differentiation through functional-level strategies and organizational arrangements when implementing business-levels strategies in a number of ways.   One of the ways is by ensuring their products or services are of superior quality than those of their competitors by ensuring the design or packaging is better. They can also do that by manufacturing and producing products that offer superior functions than those of their competitors, have added features, offer better service at the point-of-sale, and offer better after sale services and customer support or have better product/service branding than their competitors are doing. An organization can do this by investing in research and development to ensure they produce cutting-edge designs, products and branding which will enable them to stand out in the market. They can also do this by ensuring their products meet strict quality specifications and standards, which will enable them to produce products of higher quality than their competitors.

      5. a. Blue Ocean Strategy with Respect to its Level of Differentiation and Cost.

      Blue ocean strategy is a case where a company builds its competitive advantage by redefining the products or service offerings through value innovation. This enables the company to create a new market space that was nonexistent. A company is able to chart its own course in the new market space created by the blue ocean strategy. The four questions that managers need to ask themselves when they choose to design a blue ocean strategy for their organization include the following;

      • i). Which factors that can be eliminated to cut costs in the industry which competitors take for granted or ignore?
      • ii). Which factors in the industry can be below the acceptable standards in the industry and which would cut costs?
      • iii). To increase value, which factors can be elevated in the industry?
      • iv). To increase value, which factors can the company create that other players in the industry do not offer?

       

       

       

       

       

       

      5 b.  An example of Blue Ocean Strategy of a Company.

      Note: 30-High. O-LOW

                      The figure above is a strategy canvas which provides an example and clarifies a blue ocean strategy of a corporate entity. The blue ocean strategy curve is the blue one while the industry value curve is the red one. The x-axis represents the range of factors that rivals in an industry compete on and also invest in to gain competitive advantage while the y-axis represents the offering levels that customers receive as relates to the competing factors. The curves depict the performance of a company across the various competitive factors