Strategic Management the Key Risks

Strategic Management The key risks associated with the cost leadership strategy are that the process used to derive the low costs could be rendered obsolete by competitors' innovations; too much focus on cost without considering whether that is the only demand driver; and the risk of imitation. A firm could mitigate the risk of imitation by continuously improving and innovating, so that competitors have a difficult time keeping up.

The key risks associated with a focused strategy are that a competitor may have a more focused segment; the risk of new competition in the segment from a larger, stronger competitor; and that the needs of the customers in the focus segment may trend towards the mainstream over time. A firm can defend against competition from a larger, stronger competitor by developing either a strong cost leadership advantage or strong differentiation. By having a source of sustainable competitive advantage, the company can ward off larger entrants.

In simple terms, business-level strategy is the means by which a firm intends to make a profit by doing it better than its competitors. The differentiated strategy was the means by which FedEx launched its business. At the time, there was no overnight courier business. The speed and efficiency of FedEx's service offering was entirely differentiated for the first decade or so of the company's life. Intelligentsia Coffee from Chicago is an example of a focused differentiated firm. They have a niche in the ultra high-end coffee market.

Intelligentsia produces, for example, single-estate coffees that appeal to customers who find Starbucks too mainstream for their tastes. 4) the four criteria of sustainable competitive advantage are that the advantage is valuable, that it is rare, that.