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DEGREE OF CREDIT RISK EXPOSURE - refers to the relative degree of risk the business unit faces in the event of customer payment default. (For scoring, use: Very low (5); Low (4); Moderate (3); High (2); Very High (1).) DEGREE OF I/T OPERATIONAL DEPENDENCE - refers to the relative dependence on computers and software which must be operational for the business to survive. (For scoring, use: Very Low (5); Low (4); Moderate (3); High (2); Very High (1).) DE-INTEGRATION - involves performing activities in-house that were previously performed by suppliers. [Source: M. Porter] DIFFERENTIATION - a generic strategy where a firm sets out to become unique from its competitors along some dimension that is valuable to customers (and for which they will pay a premium price compared to the standard industry offering). [Source: M. Porter] Sample Differentiating Factors: Sales Force Knowledge; Heavy Advertising; Product Appearance; Superior Product Design; Product Reliability; Data Reliability; Superior Security of Data; Links to Other Products; Broad Product Features; First One to Market; Superior Customer Hot-Line Service: Superior Client Training; Superior Location; Customer Financing; Selective Distribution Channels; In-house Training Program; Superior Company Image; Product Durability; Brand Reputation; and Broad Competitive Scope (including: Breadth of Products, One Stop Shopping; Wide Geographic Coverage; Single Point for Service, and Compatibility Among Products). DIFFERENTIATION FOCUS - a generic strategy where a firm sets out to become unique from its competitors in one or a few segments along some dimension that is valuable to customers and for which they will pay a premium price compared to the standard industry offering. [Source: M. Porter] DIFFERENTIATION OF INPUTS - the more unique a supplier's product is, especially when coupled with high switching costs, the less likely firms in the industry can play one supplier against another. DIFFERENTIATOR - a firm with a competitive strategy based upon differentiation. DISCOUNT FACTOR - a percentage by which future dollars are reduced or discounted in order to account for the time value of money. If the discount rate of return is X, then the discount factor for one year = 1/(1+X). For two years, the discount factor is equal to 1/(1+X)2. For three years, the discount factor is equal to 1/(1+X)3. And the pattern continues. DISCOUNTED CASH FLOW - refers to the net present value of future cash flows (incoming less outgoing cash flows). DISCRETIONARY POLICIES - include choices regarding product configuration, performance, and features; mix and variety of products offered; level of service provided; buyers and channels served; raw materials or inputs used; compensation and benefits provided to employees; and procedures for scheduling production, maintenance, the sales force and other activities. Differentiation often rests on policy choices that make a firm unique in performing one or more value activities, deliberately raising cost in the process. [Source: M. Porter] DISTRIBUTION CHANNEL - the immediate buyer; an alternative means of distribution employed or potentially employed to reach end buyers. For example, the manufacturer of a new food product must persuade the retailer (the channel) to give it space on the supermarket shelf in order to reach the consumer (end buyer). In insurance, agents and brokers are often used as a distribution channel. A variable used to define strategically relevant buyer segments (the others are buyer type and geographic buyer location). DIVERSITY OF COMPETITORS - refers to the relative similarities and differences between competitors in terms of: strategies; origins; relationship to parent companies; etc. Usually, the more diverse the competitors, the more difficult it is to define and understand the rules of the industry. Foreign competitors, for example, often have different goals due to their different circumstances. DIVERSIFICATION STRATEGY TYPES - include: market-oriented diversification strategy; product-oriented
diversification strategy; or technology-oriented diversification strategy.
[Source: M. Porter] |
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