Contents vii

4-1e How: Determining Core Competencies Necessary to Satisfy Customer Needs 115
4-2 The Purpose of a Business-Level Strategy 116
4-3 Types of Business-Level Strategies 117
4-3a Cost Leadership Strategy 118
4-3b Differentiation Strategy 122
Strategic Focus: Apple vs. Samsung: Apple Differentiates and Samsung Imperfectly Imitates 126
4-3c Focus Strategies 127
4-3d Integrated Cost Leadership/Differentiation Strategy 129
Strategic Focus: RadioShack’s Failed Focus Strategy: Strategic Flip-Flopping 130
Summary 134 • Key Terms 135 • Review Questions 135 • Mini-Case 135 • Notes 136

5: Competitive Rivalry and Competitive Dynamics 142

Opening Case: Does Google Have Competition? Dynamics of the High Technology
Markets 143
5-1 A Model of Competitive Rivalry 146
5-2 Competitor Analysis 147
5-2a Market Commonality 147
5-2b Resource Similarity 148
Strategic Focus: Does Kellogg Have the Tiger by the Tail or Is It the Reverse? 150
5-3 Drivers of Competitive Behavior 150
5-4 Competitive Rivalry 152
5-4a Strategic and Tactical Actions 152
5-5 Likelihood of Attack 153
5-5a First-Mover Benefits 153
5-5b Organizational Size 155
5-5c Quality 156
5-6 Likelihood of Response 157
5-6a Type of Competitive Action 157
5-6b Actor’s Reputation 158
5-6c Market Dependence 158
5-7 Competitive Dynamics 159
5-7a Slow-Cycle Markets 159
5-7b Fast-Cycle Markets 161
5-7c Standard-Cycle Markets 162
Strategic Focus: The Ripple Effect of Supermarket Wars: Aldi Is Changing the Markets in Many
Countries 163
Summary 164 • Key Terms 166 • Review Questions 166 • Mini-Case 166 • Notes 167

6: Corporate-Level Strategy 172

Opening Case: Disney Adds Value Using a Related Diversification Strategy 173
6-1 Levels of Diversification 175
6-1a Low Levels of Diversification 176
6-1b Moderate and High Levels of Diversification 177
6-2 Reasons for Diversification 178
6-3 Value-Creating Diversification: Related Constrained and Related
Linked Diversification 179