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Rothaermel Assignment #2

Chapter 6

Question 6.1 – What are some drawbacks and risks to a broad generic business strategy? 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, changes in customer preference and demand as well as availability of substitutes pose a risk for both strategies. There is also the risk of imitation, and focused firms can achieve a better differentiation in their market segment

A major drawback for the focused strategy is that the segment becomes very attractive, leading to increase in rivalry, decreasing profit. Also a broad market cost leader can easily alter it 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. Create examples of value chains for three firms: one using cost leadership, another using differentiation, and a third using an integration business-level strategy.

Cost leadership strategy is a business strategy that aims at providing product and services at a lower cost whiles generating similar value for consumers (Rothaermel, 2013 p. 143). In creating 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 amount of paper processing. This will reduce filing cost and manual order process costs. Finally, businesses can develop a better inventory management system through the use of computers. This will help reduce the amount of storage for...