Q1 .

Define strategy and business-level What is the difference between these two
concepts?
In general, a strategy consists of the choices an organization makes in an attempt to gain
strategic competitiveness and earn above-average returns. The organizations strategic
choices are influenced by threats and opportunities in the external environment and by the
nation and quality of its internalresources, capabilities, and core competencies. The strategy
reflects the firms vision and mission.
Business-level strategy is concerned with a particular product market. Business-level
strategy is anintegrated and coordinated set of commitments and actions the firm uses to gain
a competitiveadvantage in a particular product market. It is the organizations core strategy.
Every firm, no matterhow small, will have at least one business-level strategy. A diversified
firm will have several types ofcorporate-level strategies as well as a separate business-level
strategy in each product market area inwhich the company competes. The essence of a firms
business level strategy is choosing to performactivities differently or to perform different
activities than competitors.

Q2. Discuss how a cost leadership strategy can allow a firm to earn above-average
returns in spite of strongcompetitive forces. Address each of the five competitive

Forces .1.Rivalry with existing competitors rivals hesitate to compete on the basis of price
because ofthe cost-leaders advantageous position.
2 .Bargaining power of buyers prices that are low enough to prevent the next-mostefficientcompetitor from earning average returns would force that firm to exit the market,
leaving the costleader with less competition and in an even stronger position. Customers
would lose their power andpay higher prices if they were forced to buy from a single firm
operating in an industry without rivals.
3. Bargaining power of suppliers higher margins relative to those of competitors make
itpossible for the cost leader to absorb a suppliers price increases.
4. Potential entrants- ever improving levels of efficiency enhance profit margins which
serves abarrier to entry.
5. Product Substitutes with the ability to lower its prices even further and still
maintaincompetitive levels of differentiation, the cost leader increases the probability the
customer will preferits product rather than a substitute

Q3. Describe how should a firm manage its relationship with their customer?

Firms must manage all aspects of their relationship with customers.

Reach: firms access and connection to customers.
Richness: depth and detail of two-way flow of information between the firm
and the customer.
Affiliation: facilitation of useful interactions with customers