Suppose another firm found a way to offer IKEA's customers (young buyers interested in stylish furniture at low cost) additional sources of differentiation while charging the same price or to provide the same service with the same sources of differentiation at a lower price. What category of competitive risk to a focus strategy would this be?
A) An industry-wide competitor decides that the market segment served by IKEA is worth entering.
B) Focusing on a more narrowly defined segment and "outfocusing" the focuser.
C) The needs of the customers in this narrow segment have become more similar to those of industry-wide competitors.
D) Experience can narrow customer's perceptions of value of the firm's differentiated features.

Question

Quizplus · Accepted Answer

This scenario describes the risk of a competitor focusing on a more narrowly defined segment and potentially offering better differentiation or lower prices than IKEA, thus "outfocusing" the focuser. This is a risk to IKEA's focus strategy and could result in a loss of customers or decreased profitability. Option A describes the risk of a new competitor entering the market segment served by IKEA, while option C describes the risk of customers in the narrow segment becoming more similar to those of industry-wide competitors. Option D describes a risk to the firm's differentiated features, but does not specifically relate to the focus strategy.

Suppose Another Firm Found a Way to Offer IKEA's Customers