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Past Year Answer MAF640-Business Level Strategy
Past Year Answer MAF640-Business Level Strategy
Past Year Answer MAF640-Business Level Strategy
Question 2
a. It is unwise for Salim not to invest in advertisements and promotional
campaign because his rivals are aggressively doing the opposite.
Salims competitors are going all out to take his market share while
Salim doing nothing to defend it. Losing the market means decrease in
turnover and profit. The consequences will be fatal to the business in
the long run. Even though Salim is convinced that his carpets are
already differentiated and of high quality. These competitive
advantage will not last for long because it can be easily imitated by its
competitor.
b. Three benefits of backward integration strategy are:
Salim will have more control over the value chain. By integrating
preceding production process to the existing business, Salim will
more control over the source of the original raw materials. This
ensure only good quality raw materials are used to manufacture
handwoven carpet in order to maintain its high quality.
the
get
will
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The firm can become too focused to satisfy buyer needs. Some firms
attempting to attain advantages through a focus strategy may have too
narrow a product or service. As a result the firm lost their market share to
rivals that offer more option and wider choice of products and services.
JUNE 2014
Question 1
a. Two competitive risk that Perubatan Tradisi faced is when it
implemented the cost leadership business strategy are :
i. Processes used by Perubatan Tradisi to produce and distribute its
products become obsolete because of competitor innovations.
Perubatan Tradisi sells its traditional medicine in its purest form
while its competitors produce their products in the form of pills,
capsules and liquid which are easier to consume.
ii. Competitors learn how to successfully imitate the cost leader
strategy. When this happens, the cost leaders must increase the
value of its products. Commonly the value is increased by selling
the products at an even lower price or by adding differentiated
features that create value for customers while maintaining price
b. Perubatan Tradisi is able to carve a market niche (traditional medicine
to cure diabetes) thus further insulating themselves from the attention
and efforts of larger, industry-wide players that cannot serve the
niche. Thus, defensibility and avoidance of direct, price-based
competition.
By serving a narrow market niche, Perubatan Tradisi can remain highly
profitable, even when the broader industry appears to be unattractive.
Concentration of resources and effort to serve and defend a niche
makes the focused/ specialized firm less vulnerable to major changes
in the industrys competitive environment.
Focus-differentiation strategy create entry barriers for potential
competitor. Highly distinctive or unique products make it difficult for
new entrants to compete with the reputation and skills that existing
firms already possess.
The bargaining powers of buyers are also very low due to the absence
of substitute for the product. Buyers are willing to accept a price
increase when a product satisfies the perceived unique needs better
than does a competitors offering.