2. • Once a company has settled on which of the
Five Generic competitive strategies to employ,
attention turns to how strategic choices along
several other dimensions can compliment its
competitive approach and maximize the
power of overall strategies
3. • The first dimension, concerns competitive
actions – both offensive and defensive
• The second dimension, concerns competitive
dynamics and the timing of strategic moves
• The third dimension, concerns the breadth of
a company’s activities ( or its scope of
operations) along an industry’s entire value
chain
4. • Offensive & Defensive Strategies
• First Mover, Late Follower or Late Mover
• Horizontal Scope (Mergers & Acquisitions)
• Vertical Scope / Integration (backward &
forward)
• Outsourcing
• Strategic Alliances
5. Going on the Offensive
• Strategic offensive are called for when a company
spots opportunities to gain profitable market
share at the expense of rivals or when a company
has no choice but to try to beat a strong rival’s
competitive advantage
• It aggressively pursuing competitive advantage
and trying to get the benefits of leading market
share, superior profit margin and rapid growth
6. Going on the Offensive
The best offensive tends to incorporate several principles
1. Focusing on building competitive advantage and then
striving to convert it into sustainable advantage
2. Creating and deploying company resources in ways
that cause rivals to struggle to defend themselves
3. Employing the elements of surprise as a opposed of
doing what rivals expect and are prepared for
4. Displaying a strong bias for swift, decisive and
overwhelming actions to overpower rivals
7. Going on the Offensive
The Principal Offensive Strategy Options
1. Using a cost-based advantage to attack competitors
on the basis of price or value
2. Leapfrogging by being the first adopter of next-
generation technologies/products
3. Pursuing continuous product innovation to draw sales
& market share away from less innovative rivals
4. Adopting and improving on the good ideas of other
companies
5. Using hit-and-run tactics to grab sales and market
sales from complacent or distracted rivals
8. Going on the Offensive
Choosing which rivals to attack
1. Market leader that are vulnerable
2. Runner-up firms with weaknesses in areas
where the challenger is strong
3. Struggling companies that are on the verge of
going under
4. Small local and regional companies with
limited capabilities
9. Defensive Strategies -
protecting market position & competitive advantage
The purpose of defensive strategies are
1. To lower the risk of being attacked
2. Weaken the impact of any attack that occurs
3. Influence challengers to aim their efforts at
other rivals
10. Defensive Strategies -
protecting market position & competitive advantage
Defensive strategies can take either of 2 forms
1. Blocking the avenues open to challengers
2. Signaling challengers that retaliation is likely
11. Defensive Strategies -
protecting market position & competitive advantage
1. Blocking the avenues open to challengers
The most frequently employed approach to defending a
company’s position involves actions that restrict a challenger’s
options for initiating a competitive attack
a. Better technologies
b. Introduce new features, models or broaden product line
c. Lowering price
d. Discourage buyers from buying competitors product by
lengthening warranties, offering free training & support
services
e. Offering volume discounts or better financing terms
12. Defensive Strategies -
protecting market position & competitive advantage
2. Signaling challengers that retaliation is likely
The goal of signaling challengers that strong
retaliation is likely in the event of an attack is
either to discourage challengers from attacking
at all OR to divert them to less threatening
options.
Either goal can be achieved by letting
challengers know the battle will cost more than
it is worth
13. Scope of the Firm
• There is another set of managerial decisions that can
affect the strength of a company’s market position
• These decisions concern the scope of a company’s
operations – the breadth of its activities and the extent
of its market reach.
• The scope of the firm concept refers to the range of
activities which the firm
– performs internally,
– the breadth of its product and service offerings,
– the extent of its geographic market presence and
– Its mix of businesses
14. Scope of the Firm
• Several dimensions of firm scope have
relevance for business level strategy in terms
of their capacity to strengthen a company’s
position in a given market
• These include the firm’s:
– Horizontal scope
– Vertical scope
– Outsourcing
15. Scope of the Firm
• Horizontal Scope
– Is the range of product and service segments that
the firm serves within its market
– Mergers & Acquisitions involving other market
participants provide a means for a company to
expand its horizontal scope
• Vertical Scope
– Is the extent to which the firm engages in the
various activities that make the industry’s entire
value chain system
16. Horizontal Scope –
with M&A strategies
• Merger is the combining of 2 or more
companies into a single corporate entity, with
the newly created company often taking a
new name
• Acquisitions is when one company buys or
take control of another company
17. Horizontal Scope –
with M&A strategies
• Horizontal mergers and acquisitions, which
involve combining the operations of firms within
the same general industry, provide an effective
means for firms to rapidly increase the scale and
horizontal scope of their core business
• Combining the operations of two companies, via
M&A, is an attractive strategic option for
strengthening the resulting company’s
competitiveness and opening up avenues of new
market opportunity
18. Horizontal Scope –
with M&A strategies
• Increasing a company’s horizontal scope can
strengthen its business and increase its
profitability in 5 ways:
1. By improving the efficiency of its operations
2. By heightening its product differentiation
3. By reducing market rivalry
4. By increasing the company’s bargaining over
suppliers and buyers
5. By enhancing its flexibility & dynamic
capabilities
19. Horizontal Scope –
with M&A strategies
• To achieve these benefits, horizontal mergers and
are acquisitions strategies typically aimed at any
of 4 outcomes:
1. Increasing the company’s scale of operations
and market share
2. Expanding a company’s geographic coverage
3. Extending the company’s business into new
product categories
4. Gaining quick access to new technologies or
complementary resources and capabilities
20. Vertical Scope/Integration Strategies
• A vertically integrated firm is one that
participates in multiple segments or stages of
an industry’s overall value chain
• A vertical integration strategy can expand the
firm’s range of activities
– backward into sources of supply and/or
– Forward towards end users
21. Vertical Scope/Integration Strategies
• A firm can pursue vertical integration by
starting its own operations in other stages of
the vertical activity chain, by acquiring a
company already performing the activities it
want to bring in-house
22. Vertical Scope/Integration Strategies
• Vertical integration strategies can aim at
– Full integration (participating in all stages of the
vertical chain or
– Partial integration (building positions in selected
stages of the vertical chain) or
– Tapered integration (which involve a mix of in-
house and outsourced activity in any given stage
of the vertical chain)
