The Five Generic Competitive Strategies Which One to Employ? Part II
The Agenda <ul><li>Best Cost Provider Strategy </li></ul><ul><li>Focused Low-Cost Strategy </li></ul><ul><li>Focused Diffe...
Best-Cost  Provider  Strategies <ul><ul><li>Make an upscale product at a lower cost </li></ul></ul>Combine a strategic emp...
Best-Cost  Provider  Strategies <ul><ul><li>Give customers more value for money </li></ul></ul>Combine a strategic emphasi...
Best-Cost Provider  <ul><li>Strategic Targets  </li></ul><ul><li>Value-conscious customers </li></ul><ul><li>Competitive A...
Best-Cost Provider  <ul><li>Marketing Emphasis  </li></ul><ul><li>Tout delivery of best value </li></ul><ul><li>Either del...
Risk of a Best-Cost Provider Strategy <ul><ul><li>Low-cost leaders may be able to siphon customers away with a lower price...
Focused (Market Niche) Strategies <ul><li>Concentrated attention on a narrow piece of the total market </li></ul><ul><li>O...
Focused (Market Niche) Strategies
FUNCTIONAL EXPERIENTIAL RELATIONAL PSYCHOLOGICAL Value  for me SOCIAL Value  of me Source: Adopted from “A Customer Value ...
Focused Low-Cost Strategy Securing a competitive advantage by serving a lower price than rival competitors Introduction Ho...
Focused Low-Cost Strategy <ul><li>Strategic Target </li></ul><ul><li>A narrow market niche where buyer needs and preferenc...
Focused Low-Cost Strategy <ul><li>Production Emphasis </li></ul><ul><li>A continuous search for cost reduction while incor...
Focused Low-Cost Strategy
Focused Differentiation Strategy Introduction Aims at securing a competitive advantage by offering niche members a product...
Focused Differentiation Strategy <ul><li>Strategic Target </li></ul><ul><li>A narrow market niche where buyer needs and pr...
Focused Differentiation Strategy <ul><li>Production Emphasis </li></ul><ul><li>Custom made products that match the tastes ...
Focused Differentiation Strategy
<ul><li>Big enough to be profitable and offers good growth potential </li></ul><ul><li>Not crucial to success of industry ...
<ul><li>Competitors find effective ways to match a focuser’s capabilities in serving a niche </li></ul><ul><li>Niche buyer...
Deciding  Which  Generic  Competitive  Strategy  to  Use <ul><li>Each positions a company differently in its market </li><...
Deciding  Which  Generic  Competitive  Strategy  to  Use <ul><li>Each points to different ways of experimenting with the b...
This rarely produces a sustainable competitive advantage or a distinctive competitive position The big risk Selecting a “ ...
Thank You! www.amisampath.com
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The Five Generic Competitive Strategies : Which One to Employ?

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A summary presentation of Chapter 5 of the book "Crafting and Executing Strategy, (SIE): The Quest for Competitive Advantage: Concepts and Cases, 14/e"
http://highered.mcgraw-hill.com/sites/0070600899/information_center_view0/

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The Five Generic Competitive Strategies : Which One to Employ?

  1. 1. The Five Generic Competitive Strategies Which One to Employ? Part II
  2. 2. The Agenda <ul><li>Best Cost Provider Strategy </li></ul><ul><li>Focused Low-Cost Strategy </li></ul><ul><li>Focused Differentiation Strategy </li></ul><ul><li>Risks of Focused Strategies </li></ul><ul><li>Deciding Which One to Choose </li></ul>
  3. 3. Best-Cost Provider Strategies <ul><ul><li>Make an upscale product at a lower cost </li></ul></ul>Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
  4. 4. Best-Cost Provider Strategies <ul><ul><li>Give customers more value for money </li></ul></ul>Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
  5. 5. Best-Cost Provider <ul><li>Strategic Targets </li></ul><ul><li>Value-conscious customers </li></ul><ul><li>Competitive Advantage </li></ul><ul><li>Ability to give customers more value for money </li></ul><ul><li>Product Line </li></ul><ul><li>Items with appealing attributes, assorted upscale features </li></ul>
  6. 6. Best-Cost Provider <ul><li>Marketing Emphasis </li></ul><ul><li>Tout delivery of best value </li></ul><ul><li>Either deliver comparable features at a lower price than rivals or match rivals on prices and provide better features </li></ul><ul><li>Keys to Sustain </li></ul><ul><li>Unique expertise in simultaneously managing costs down while </li></ul><ul><li>incorporating upscale features and attributes </li></ul>
  7. 7. Risk of a Best-Cost Provider Strategy <ul><ul><li>Low-cost leaders may be able to siphon customers away with a lower price </li></ul></ul><ul><ul><li>High-end differentiators may be able to steal customers away with better product attributes </li></ul></ul>A best-cost provider may get squeezed between strategies of firms using low-cost and differentiation strategies
  8. 8. Focused (Market Niche) Strategies <ul><li>Concentrated attention on a narrow piece of the total market </li></ul><ul><li>Objective is to serve niche buyers better than rivals </li></ul><ul><li>Niche can be defined by geographic uniqueness, specialized requirements in using the product, or by special product attributes appealing only to the selected niche </li></ul>Introduction
  9. 9. Focused (Market Niche) Strategies
  10. 10. FUNCTIONAL EXPERIENTIAL RELATIONAL PSYCHOLOGICAL Value for me SOCIAL Value of me Source: Adopted from “A Customer Value Typology: Beyond the Functional – Emotional Dichotomy., Liyanage (2003) Re-Visiting Value Based Segmentation
  11. 11. Focused Low-Cost Strategy Securing a competitive advantage by serving a lower price than rival competitors Introduction How? <ul><li>Out-manage rivals in controlling the factors that drive costs </li></ul><ul><li>Reconfigure the firm’s value chain in ways that yield a cost edge over rivals </li></ul>
  12. 12. Focused Low-Cost Strategy <ul><li>Strategic Target </li></ul><ul><li>A narrow market niche where buyer needs and preferences are distinctively different </li></ul><ul><li>Basis of Competitive Advantage </li></ul><ul><li>Low overall cost than rivals in serving niche members </li></ul><ul><li>Product Line </li></ul><ul><li>Features and attributes tailored to the tastes and requirements of niche members </li></ul>
  13. 13. Focused Low-Cost Strategy <ul><li>Production Emphasis </li></ul><ul><li>A continuous search for cost reduction while incorporating features and attributes matched to niche member preferences </li></ul><ul><li>Marketing Emphasis </li></ul><ul><li>Communicate attractive features of a budget-priced product offering that fits niche buyers’ expectations </li></ul><ul><li>Keys to Sustaining the Strategy </li></ul><ul><li>Stay committed to serving the niche at lowest overall cost; don’t blur the firm’s image by entering other market segments or adding other products to widen market appeal </li></ul>
  14. 14. Focused Low-Cost Strategy
  15. 15. Focused Differentiation Strategy Introduction Aims at securing a competitive advantage by offering niche members a product they perceive as, well suited to their own unique tastes and preferences Targets upscale buyers who desire products and services with world class attributes.
  16. 16. Focused Differentiation Strategy <ul><li>Strategic Target </li></ul><ul><li>A narrow market niche where buyer needs and preferences are distinctively different </li></ul><ul><li>Basis for Competitive Advantage </li></ul><ul><li>Attributes that appeal specifically to niche members </li></ul><ul><li>Product Line </li></ul><ul><li>Features and attributes tailored to the tastes and requirements of niche members </li></ul>
  17. 17. Focused Differentiation Strategy <ul><li>Production Emphasis </li></ul><ul><li>Custom made products that match the tastes and requirements of niche members </li></ul><ul><li>Marketing Emphasis </li></ul><ul><li>Communicate how products offering does the best job of meeting niche buyers’ expectations </li></ul><ul><li>Keys to Sustaining the Strategy </li></ul><ul><li>Stay committed to serving the niche better than rivals; don’t blur the firm’s image by entering other market segments or adding other products to widen market appeal </li></ul>
  18. 18. Focused Differentiation Strategy
  19. 19. <ul><li>Big enough to be profitable and offers good growth potential </li></ul><ul><li>Not crucial to success of industry leaders </li></ul><ul><li>Costly or difficult for multi-segment competitors to meet specialized needs of niche members </li></ul><ul><li>Focuser has resources and capabilities to effectively serve an attractive niche </li></ul><ul><li>Few other rivals are specializing in same niche </li></ul><ul><li>Focuser can defend against challengers via superior ability to serve niche members </li></ul>When a Focused Low-Cost Strategy or Focused Differentiation Strategy is Attractive
  20. 20. <ul><li>Competitors find effective ways to match a focuser’s capabilities in serving a niche </li></ul><ul><li>Niche buyers’ preferences shift towards product attributes desired by majority of buyers – niche becomes part of overall market </li></ul><ul><li>Segment becomes so attractive it becomes crowded with rivals, causing segment profits to be splintered </li></ul>The Risks of Focused Strategies
  21. 21. Deciding Which Generic Competitive Strategy to Use <ul><li>Each positions a company differently in its market </li></ul><ul><li>Each establishes a central theme for how a company will endeavor to out-compete rivals </li></ul><ul><li>Each creates some boundaries for maneuvering as market circumstances unfold </li></ul>
  22. 22. Deciding Which Generic Competitive Strategy to Use <ul><li>Each points to different ways of experimenting with the basics of the strategy </li></ul><ul><li>Each entails differences in product line, production emphasis, marketing emphasis, and means to sustain the strategy </li></ul>
  23. 23. This rarely produces a sustainable competitive advantage or a distinctive competitive position The big risk Selecting a “ stuck in the middle ” strategy!
  24. 24. Thank You! www.amisampath.com
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