1. Low-cost, differentiation, and speed-based   strategies2. Characteristics and value of a market focus   strategy3. Requ...
Cost Leadership•   Business success built on cost leadership    requires the business to be able to provide    its product...
Low Cost Activity Benefits1. Some low-cost advantages reduce the likelihood   of buyers’ pricing pressure2. Truly sustaine...
Differentiation•   Differentiation requires that the business    have sustainable advantages that allow it to    provide b...
Speed Strategies•   Speed-based strategies, or rapid response to    customer requests or market and technological    chang...
Market Focus•   Market focus: the extent to which a    business concentrates on a narrowly defined    market•   Better sma...
Stages of Industry Evolution and       Business Strategy Choices•   The requirements for success in industry    segments c...
Emerging Industries•   Emerging industries are newly formed or re-    formed industries that typically are created    by t...
Competitive Advantages and Strategic   Choices in Growing Industries•    Rapid growth brings new competitors into     the ...
Business Strategies in Growth                   Industries•   For success business strategies in growth industries    requ...
Competitive Advantages and Strategic   Choices in Mature Industries•   As an industry evolves, its rate of growth    event...
Competitive Advantages and Strategic   Choices in Declining Industries• Declining industries characterized by demand  grow...
Competitive Advantage in         Fragmented Industries• A fragmented industry is one in which no firm  has a significant m...
Competitive Advantage in            Global Industries• Global industry composed of firms whose  competitive positions in m...
Building Value as a Basis for Choosing        Diversification or Integration•     The grand strategy selection matrix and ...
Chapter 8 presentation
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Chapter 8 presentation

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Chapter 8 presentation

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Chapter 8 presentation

  1. 1. 1. Low-cost, differentiation, and speed-based strategies2. Characteristics and value of a market focus strategy3. Requirements for business success at different stages of industry evolution4. Good business strategies in fragmented and global industries5. Decide when a business should diversify
  2. 2. Cost Leadership• Business success built on cost leadership requires the business to be able to provide its product or service at a cost below what its competitors can achieve
  3. 3. Low Cost Activity Benefits1. Some low-cost advantages reduce the likelihood of buyers’ pricing pressure2. Truly sustained low-cost advantages may push rivals into other areas3. New entrants competing on price must face an entrenched cost leader4. Low-cost advantages should lessen the attractiveness of substitute products5. Higher margins allow low-cost producers to withstand supplier cost increases
  4. 4. Differentiation• Differentiation requires that the business have sustainable advantages that allow it to provide buyers with something uniquely valuable to them• Arises from one or more activities in the value chain that create a unique value important to buyers• Strategists use benchmarking and consider the 5 forces in considering differentiation
  5. 5. Speed Strategies• Speed-based strategies, or rapid response to customer requests or market and technological changes, have become a major source of competitive advantage for numerous firms in today’s intensely competitive global economy• Customer responsiveness• Product development cycles• Product or service improvements• Speed in delivery or distribution• Information Sharing and Technology
  6. 6. Market Focus• Market focus: the extent to which a business concentrates on a narrowly defined market• Better small companies thrive because they serve narrow market niches• Market focus allows some businesses to compete on the basis of low cost, differentiation, and rapid response against much larger businesses with greater resources
  7. 7. Stages of Industry Evolution and Business Strategy Choices• The requirements for success in industry segments change over time• Strategists can use these changing requirements, which are associated with different stages of industry evolution, as a way to isolate key competitive advantages and shape strategic choices around them
  8. 8. Emerging Industries• Emerging industries are newly formed or re- formed industries that typically are created by technological innovation, newly emerging customer needs, or other economic or sociological changes• There are no “rules of the game
  9. 9. Competitive Advantages and Strategic Choices in Growing Industries• Rapid growth brings new competitors into the industry• Growth industry strategies need to emphasize – brand recognition – product differentiation – financial resources to support both heavy marketing expenses and the effect of price competition on cash flow
  10. 10. Business Strategies in Growth Industries• For success business strategies in growth industries require one or more of the following features: – Establishing strong brand recognition – Ability and resources to meet increasing demand – Strong product design skills to adapt products and services – Ability to differentiate the firm’s product[s] from competitors entering the market – R&D resources and skills to create product variations – Ability to build repeat buying from established customers – Strong capabilities in sales and marketing
  11. 11. Competitive Advantages and Strategic Choices in Mature Industries• As an industry evolves, its rate of growth eventually declines• Firms in mature industry sell increasingly to experienced, repeat buyers who are now making choices among known alternatives• Competition becomes more oriented to cost and service as knowledgeable buyers expect similar price and features
  12. 12. Competitive Advantages and Strategic Choices in Declining Industries• Declining industries characterized by demand growing slower than demand in the economy or actual declines• Strategies can involve: – Focus on higher growth or a higher return – Emphasize product innovation and quality improvement – Emphasize production and distribution efficiency – Gradually harvest the business
  13. 13. Competitive Advantage in Fragmented Industries• A fragmented industry is one in which no firm has a significant market share and can strongly influence industry outcomes• Strategies can involve: – Tightly managed decentralization – “Formula” facilities – Increased value added – Specialization – Bare bones/no frills
  14. 14. Competitive Advantage in Global Industries• Global industry composed of firms whose competitive positions in major geographic or national markets are fundamentally affected by their overall global competitive positions• Strategies can involve: – License foreign firms to produce and distribute the firm’s products – Maintain a domestic production base and export products to foreign countries – Establish foreign-based plants and distribution to compete directly in the markets of one or more foreign countries
  15. 15. Building Value as a Basis for Choosing Diversification or Integration• The grand strategy selection matrix and model of grand strategy clusters are useful tools to help dominant product company managers evaluate and narrow their choices among alternative grand strategies• Dominant product company managers who choose diversification or integration eventually create another management challenge

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