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Strategies

1. Assume that you are a risk adverse manager in an industry experiencing rapid technological innovations. Which of the generic strategies would you be inclined to favor to mitigate risk? Why?

2. It is said that competitive forces shape strategy. If this were true, how would you addess these forces in the selection of alternative strategies for Southwest Airlines?

3. Which comes first, the development of the long-term objectives, or the evaluation of organizational strengths and weaknesses?

4. How does Southwest organization select generic and grand strategies?

Solution Preview

1. Assume that you are a risk adverse manager in an industry experiencing rapid technological innovations. Which of the generic strategies would you be inclined to favor to mitigate risk? Why?

In order to mitigate risks, a risk adverse manager will go for Focus strategy among the generic strategies. The focus strategy concentrates on narrow segment and within that segment attempts to achieve either a cost advantage or differentiation.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.

source: http://www.ifm.eng.cam.ac.uk/dstools/paradigm/genstrat.html

Focus strategy is less risky because of the narrow market focus, this strategy involves lower volumes and hence less commitment of resources and low operating expenses on R&D, marketing etc.. Further, firms following this strategy ...

Solution Summary

Assume that you are a risk adverse manager in an industry experiencing rapid technological innovations. Which of the generic strategies would you be inclined to favor to mitigate risk? Why?

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