Question

Which of the following are examples of a company using strategy to seek a competitive advantage? Check all that apply. a. In the 17th century, the Dutch East India Company allied with a powerful leader in Indonesia to gain exclusive access to spices, and during the company’s existence, it carried about five times the shipping tonnage of its nearest competitor, an English company. b. In the 1970s, the Sumitomo Bank of Japan bailed out two major corporate customers at a cost of over $1 billion, greatly hurting its profitability. However, its loyalty to its customers enhanced its reputation, and by 1981 it was Japan’s most profitable financial institution. c. The U.S. bookseller Borders focused on offering a wide variety of books in a large amount of retail space as sales per square foot declined 34% from 1997 to 2009, and it did not invest significantly in the rapidly growing online market for print and electronic books dominated by Amazon. d. It filed for bankruptcy in 2011 and was liquidated. The Finnish company Stora Enso appeals to the world’s desire to use renewable resources by developing new packaging, paper, textile, and other products based on sustainably grown wood. Quarterly profit recently rose 38% year over year, and the company has garnered much recognition from environmental groups.

Answer 1

Answer:

a. In the 17th century, the Dutch East India Company allied with a powerful leader in Indonesia to gain exclusive access to spices, and during the company’s existence, it carried about five times the shipping tonnage of its nearest competitor, an English company.

b. In the 1970s, the Sumitomo Bank of Japan bailed out two major corporate customers at a cost of over $1 billion, greatly hurting its profitability. However, its loyalty to its customers enhanced its reputation, and by 1981 it was Japan’s most profitable financial institution.

d. The Finnish company Stora Enso appeals to the world’s desire to use renewable resources by developing new packaging, paper, textile, and other products based on sustainably grown wood. Quarterly profit recently rose 38% year over year, and the company has garnered much recognition from environmental groups.

Explanation:

Basically there are 3 types of strategies that a company can carry out to try to gain a competitive advantage over its rivals:

1. cost leadership strategy: sell the company's products at the lowest price usually through economies of scale. E.G. DUTCH EAST INDIA COMPANY
2. differentiation strategy: sell a unique and different product, usually high quality or innovating products. E.G. SUMITOMO BANK
3. focus strategy: focus the company's products towards a narrow target segment (niche) either through cost leadership or differentiation. E.G. STORA ENSO