2. Explain what distinguishes each of the five generic competitive strategies an
ID: 332021 • Letter: 2
Question
2. Explain what distinguishes each of the five generic competitive strategies and why do some of these strategies work better in certain kinds of competitive conditions than in others. 3. Define corporate culture. Then describe, compare and contrast the following four corporate cultures: strong, weak, unhealthy, healthy. strong culture the 'best? Explain why or why not. Is a 4. (a) Define then discuss specific differences between related and unrelated diversification as discussed in the text. (b) When and why should a compan consider diversification? 5. Explain the value of strategic group maps. Explain why some positions are more important than others. 6. Evaluating industry attractiveness and business competitive strength are the first two steps to evaluate the strategy of a diversified company. Explain HOW TO (each step) construct a nine-cell industry attractiveness- competitive strength matrix and HOW TO place the SBUs on the matrix Identify all calculations which would the importance of weighting. be required in each of the steps. Discuss
Explanation / Answer
2) Five generic competitive strategies:
Each of the above strategy works in a different manner and it is the sole responsibility of the company to decide which strategy to be adopted to obtain the best position in the market. Each of the strategy works uniquely to position the company in the market. For example a low cost provider strategy explores ways of reducing the costs. Similarly a differentiation strategy helps in differentiating the company’s products to add value to the customers. Each strategy creates differences in terms of methods of sustaining the market, production emphasis etc.
3) Corporate culture:
The corporate culture of a company is the belief and behavior of the company in order to determine how a company’s employees and management should deal business transactions with the outsiders. This can be reflected through its dress code, business hours, benefits to employees, method of dealing the clients etc.
Strong organizational culture – this type of culture is widely followed and shared within the organization. This type of culture ensures that the organization norms and beliefs are strongly incorporated among its employees. In which case employees and organizational goals match each other which results in success. But this type of cultuires is subject to change.
Weak organizational culture: this is opposite strong organizational culture where the values are not shared between the employees of the organization. Here the employees give more preference to their personal goals rather than organizational goals. Hence this type of organizations rely more on rules and regulations rather than share information.
Healthy organizational culture: A healthy organizational culture aligns the employees and subordinates in line with the people at the top level. This benefits everyone from top to the bottom level employees. In case of inequality, the culture can be changed. A healthy organization has several good traits like defined purpose, service oriented, flexibility etc.
Unhealthy organizational culture – this is the opposite of healthy organizational culture where process is given more importance than purpose of the organization. The authority in the organization is preferred rather than service. Hence it is unhealthy organization culture where everything seems to be upside down compared to a healthy organization.
Strong culture is considered to be the best this is because those organizations norms are strongly incorporated on the employees who will enable to focus more on organizational objectives which can be profit maximization, market share etc rather than on individual goals.
4) Differences between related and unrelated diversification:
Why diversification:
Diversification will help the company to achieve more return on its investment which compensates for the risk and the cost. It is necessary for the companies to adopt good diversification strategy to gain competitive advantage, to achieve economies of scale etc.
Related diversification:
Related diversification is where business expands or adds existing product lines or markets. A company may purchase another company engaged in similar type of business. The advantage of related diversification is that it helps the industry to understand the strengths, weaknesses, opportunities and threats. But there may be challenges like managing employees, handling two different types of cultures, promotions, and layoffs may also happen as a result of diversification.
Unrelated diversification is where the business expands to unrelated business lines or markets. The company may go in for such diversification to be cost efficient. It also helps in increasing the profitability, offsetting the cash flow
5) Strategic group maps:
Strategic group maps are used by the company to identify how it is placed in the market or its position in a particular sector or field. It helps the organization to define the scope of its competitors.
Not all positions in the map are attractive:
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