1. The document discusses different business strategies such as cost leadership, differentiation, market focus, and speed-based strategies. It explains the characteristics and benefits of each strategy. 2. The stages of industry evolution are explored, from emerging to growing to mature to declining industries. The document outlines the competitive advantages and strategic choices that are most suitable for businesses in each stage. 3. Additional strategies are presented for fragmented and global industries, including decentralized approaches and specialization. The last section discusses strategies for diversification and integration.

2. 1. Low-cost, differentiation, and speed-based
strategies
2. Characteristics and value of a market focus
strategy
3. Requirements for business success at
different stages of industry evolution
4. Good business strategies in fragmented and
global industries
5. Decide when a business should diversify

3. 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

4. Low Cost Activity Benefits
1. Some low-cost advantages reduce the likelihood
of buyers’ pricing pressure
2. Truly sustained low-cost advantages may push
rivals into other areas
3. New entrants competing on price must face an
entrenched cost leader
4. Low-cost advantages should lessen the
attractiveness of substitute products
5. Higher margins allow low-cost producers to
withstand supplier cost increases

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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