Concepts in Strategic Management and Competitive Advantage

Strategic Management – Concepts
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Strategic Management – Concepts
Part A: Product Differentiation
I – Product Differentiation and Customer Perception
Product differentiation refers to different characteristics and perceived distinctions in a product or service. Product differentiation creates a unique identity for brands to separate products from competitors. Product differentiation is influenced by customer perception. The purpose is to attract customers to make favorable purchase decisions. Customer perception is the set of opinions by the target market for a product or service. Customer perception could alter brand strategies and marketing communication techniques by forcing opinions. Brands would incorporate customer perception while creating differentiation to increase retention rate during the competition (Barney & Hesterly, 2015).
II – Categories of Product Differentiation
* Horizontal Differentiation – The category is dependent on customers’ preferences. Products are the same in terms of features, quality, and price. However, customers would differentiate through personal preferences while purchasing a product or service (Barney & Hesterly, 2015).
* Vertical Differentiation – The price factor influences the category. Brands would set the right price for a product or service to differentiate in the marketplace. Customers would make a purchase decision based on the value created through products based on prices offered in the market (Barney & Hesterly, 2015).
* Mixed Differentiation – The category differentiates a product or service based on branding attributes. Customers are exposed to similar product and price categories in the market. However, the brand positioning would differentiate for customers (Barney & Hesterly, 2015).
III – Relationship between Product Differentiation and Managerial Creativity
Managers are creative engineers while creating a product or service differentiation. Managers embed creativity in the business processes to segregate products and services from competitors while penetrating the consumer market. Managerial creativity would incorporate reasonable pricing and positioning techniques based on product nature and features to attract customers to make a favorable purchase decision. Product differentiation could experience inefficacy in the long run if managerial creativity is absent or incompetent to understand paradigm shifts in the marketplace. Hence, managerial creativity is essential for product differentiation (Barney & Hesterly, 2015).
Part B: Flexibility and Real Options
I – Strategic Flexibility and Third Generic Business Level Strategy
Strategic flexibility refers to an organization’s competency to respond to changes in the macro business environment. Organizations would identify business environment changes and make necessary adjustments in strategies, resource allocation, and skillsets to overcome potential threats. Flexibility allows organizations to mold the strategic prospects immediately and retain relevance with the evolving market conditions. O...