Strat generic 7
Upcoming SlideShare
Loading in...5

Like this? Share it with your network


Strat generic 7






Total Views
Views on SlideShare
Embed Views



4 Embeds 60 53 3 2 2



Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

Strat generic 7 Presentation Transcript

  • 1. Generic Competitive Strategies VII
  • 2. Generic Competitive Strategies
    • Two basic types:
    • - Cost
    • - Differentiation
    • Additional generic strategies based on the scope of application :
    • Cost
    • - Focus
    • Differentiation
  • 3. Generic Competitive Strategies
    • COST leadership
    • promoted by attention to details such as frugality and discipline.
    • requires a culture of trust that promotes individualism, risk taking and innovation.
  • 4. Cost
    • Low cost relative to competitors is the main pursuit but not at the cost of quality or service.
    • The attained low cost position needs strengthening through reinvesting in high margin new equipment, machinery etc to further enhance the low cost leadership
  • 5. Factors of Cost Leadership
    • Aggressive construction of efficient-scale facilities
    • Vigorous pursuit of cost reductions from experience curve
    • Cost minimization in areas such as R&D, services, sales force and advertising
    • Tight cost and overhead control
  • 6. Differentiation
    • Differentiating a product/service implies creating a perceived uniqueness in the industry through
            • - design or brand image
            • - technology
            • - customer service
            • - dealer network
            • - other special features
  • 7. Differentiation
    • Differentiation does not mean total disregard to cost except that cost is not the primary strategic target.
    • Differentiation insulates a company from rivalry through brand loyalty or price insensitivity.
  • 8. Cost OR Differentiation
    • Depends :
    • - Toyota competes on cost (price)
    • - Mercedes competes on differentiation
    • Toyota is much larger company.
    • An organization should choose either of the alternatives, not both.
    • Being all things to all people can be ruinous that Porter calls ‘being stuck in the middle’.
  • 9. Stuck in the Middle
    • Such strategies are not sustainable in the long run because of factors such as a clash of cultures.
    • An organizational structure that is supportive of cost leadership can be ruinous for differentiation.
    • Conflicts can arise due to policies such as
    • - tight control system
    • - pursuit of scale economies
    • - dedication to learning curve.
  • 10. Focus
    • Relates to targeting a particular buyer group, segment of product line or geographic market.
    • The Focus strategy is built on the premises of serving a narrow market so that it can perform more effectively than the competitors who operate more broadly.
  • 11. Threats to
    • Cost : imitation
            • technology changes proximity to differentiation
    • Differentiation : imitation
    • loss of attraction of differentiation base
    • Focus : imitation
            • target segment gets unattractive
            • new focusers arrive
  • 12. Elements of Low-cost Skills/resources required Organizational requirement Capital Tight cost control Engineering skill Frequent & detailed reports Close supervision Structured organization Easy product design Incentives based on target Low-cost distribution Strong supply chain
  • 13. Elements of Differentiation Skills/resources required Organizational requirement Strong marketing Strong coordination Product engineering Subjective measurement Creative flair Amenities to attract skilled people Strong research Leadership in Quality Technology
  • 14. Elements of Focus
    • Combination of the Cost and Differentiation policies directed to particular strategic target
  • 15. Hindrances to Low-cost
    • Technology changes nullify the past investment or learning
    • Low-cost learning by newcomers through imitation or new investment
    • Inability to adopt to the required changes in the market
  • 16. Hindrances to Differentiation
    • Imitation narrows perceived differentiation
    • Buyer need falls
    • Cost differential is too wide to hold on to brand loyalty
  • 17. Hindrances to Focus
    • Cost differential between broad range and focus widens
    • Difference between the broad range & the focused product narrows
    • Competitors find submarket within the strategic target