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Basic Competitive Advantages


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This following presentation comprehensively describes competitive advantage: Low Cost Leadership or Differentiation Strategy.

With a cost leadership strategy, the firm develops sustainable cost advantage over competitors.

With a differentiation strategy, the firm incorporates differentiating features that cause consumer to prefer firm’s product.

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Basic Competitive Advantages

  1. 1. Strategic Management
  2. 2. You can download this presentation at: http:// Please visit F reePresentation. org for more presentations on marketing, strategy and case solution
  3. 3. COMPETITIVE ADVANTAGE AND GENERIC STRATEGIES <ul><li>Competitive advantage </li></ul><ul><ul><li>When a company can out match its rivals in attracting and maintaining its targeted customers </li></ul></ul>
  4. 31. COMPETITIVE STRATEGIES IN INTERNATIONAL MARKETS <ul><li>Offensive </li></ul><ul><li>Defensive </li></ul>
  5. 32. COUNTERPARRY <ul><li>A popular strategy for multinationals </li></ul><ul><li>Fends off a competitor's attack in one country by attacking them in another country </li></ul><ul><li>E.G. Kodak versus Fuji </li></ul>
  6. 33. SUSTAINING COMPETITIVE ADVANTAGE <ul><li>Sustainable means that strategies are not easily neutralized, copied, or attacked by competitors </li></ul>
  7. 34. LOW COST LABOR <ul><li>Most imitated sources of lower costs in the international market </li></ul><ul><li>Quickly copied by competitors </li></ul>
  8. 35. CORPORATE STRATEGY <ul><li>Contrasts with business level strategy </li></ul><ul><li>How companies choose their mixtures of different businesses </li></ul><ul><li>Diversification </li></ul><ul><ul><li>Related </li></ul></ul><ul><ul><li>Unrelated </li></ul></ul>
  9. 36. MULTINATIONAL DIVERSIFICATION <ul><li>A quick way to gain a market presence </li></ul><ul><li>Coordinate and use resources from any location </li></ul><ul><li>Establishes global brand names </li></ul><ul><li>Cross subsidization </li></ul>
  10. 37. ANALYSIS TECHNIQUES <ul><li>Help Managers Understand </li></ul><ul><ul><li>A company's competitive position in the industry </li></ul></ul><ul><ul><li>Opportunities and threats faced by their company </li></ul></ul><ul><ul><li>Company's strengths and weaknesses </li></ul></ul>
  11. 38. INDUSTRY EFFECTS ON STRATEGY SELECTION <ul><li>Market size </li></ul><ul><li>Ease of entry and exit </li></ul><ul><li>Whether there are economies of scale in production </li></ul><ul><li>Driving forces of change </li></ul><ul><li>Nature of competition in industry </li></ul>
  12. 39. EXAMPLE KEY SUCCESS FACTORS <ul><li>Innovative technology </li></ul><ul><li>Broad product line </li></ul><ul><li>Distribution channel effectiveness </li></ul><ul><li>Price advantages </li></ul><ul><li>Promotion effectiveness </li></ul>
  13. 40. <ul><li>Superior physical facilities </li></ul><ul><li>Experience of firm in business </li></ul><ul><li>Cost position for raw materials </li></ul>
  14. 41. FORMULATING THE BEST STRATEGIES <ul><li>Know the industry and KSFs </li></ul><ul><li>Understand and anticipate your competitors' strategies </li></ul>
  15. 42. KEY POINT FOR MULTINATIONAL MANAGEMENT <ul><li>The SWOT analysis for the MNC is more complex </li></ul><ul><li>Each country provides its own operating environment </li></ul><ul><li>A country-by-country SWOT is probably most prudent </li></ul>
  16. 43. CORPORATE STRATEGY SELECTION <ul><li>Deciding which businesses in the portfolio are targets for growth and investment and which are targets for divestment or harvesting </li></ul>
  17. 44. ASSESSING A CORPORATE BUSINESS PORTFOLIO <ul><li>The basic tool: matrix analyses </li></ul><ul><li>The most popular is the growth-share matrix of the Boston consulting group (BCG) </li></ul>
  18. 45. THE BCG GROWTH-SHARE MATRIX <ul><li>Based on the industry growth rate the relative market share </li></ul><ul><ul><li>Stars </li></ul></ul><ul><ul><li>Dogs </li></ul></ul><ul><ul><li>Cash cows </li></ul></ul><ul><ul><li>Problem children </li></ul></ul>
  19. 46. MATRIX ANALYSES FOR THE DIVERSIFIED MULTINATIONAL COMPANY <ul><li>The portfolio assessment becomes more complex </li></ul><ul><li>Portfolio analyses must be conducted for each business in each country or region of operation </li></ul>
  20. 48. Thank You