This document discusses competitive strategy and competitive advantage. It explains that firms must decide whether to compete in broad or narrow markets, on cost or differentiation, and how those choices relate to competitive scope and advantage. Competitive advantage comes from something valuable that cannot be easily copied. Firms can achieve it through low cost, differentiation, market focus, or other factors like quality, delivery, workforce skills, and reputation. The document also analyzes new Cadbury products and whether they will succeed based on reasons for and against success as well as external threats like economic conditions.

1. Where does a firm want to compete?
In a broad market?
Or
In a narrow market?
(Competitive Scope)

2. How does a firm want to compete?
On Cost
Or
On differentiation
(Competitive advantage)

3. How does a firm want to compete?
If on cost
In a broad(mass) market?(
(Cost leadership)
Or
In a narrow(niche) market
(Cost focus)

4. How does a firm want to compete?
If on Differentiation
In a broad market?
(Differentiation leadership)
Or
In a narrow market
(Differentiation focus)

5. What is Competitive Advantage
something that matters enough to
customers that cannot easily be
copied by competitors
something which makes a business
stand out and be successful
60% of new restaurants close within 2 years of opening
They have failed to get a competitive advantage

6. Ways of achieving Competitive Advantage
Being the lowest cost provider for a given quality of product.
Low cost in itself will not guarantee success.
It must be accompanied by the level of quality that the
customer expects.

7. Differentiate products from rivals
Giving a USP to the product
Differentiation alone will not give a competitive advantage.
It must a differentiated product that customers want to
buy.

8. Focus on a particular sector of the market
Select a market niche.
Cost focus
Differentiation focus

9. Cost focus
Drives down the cost in the market segment to undercut the
competitors.
Differentiation focus
Sells a unique and differentiated product in a narrow market

10. Is cost or differentiation only way to
achieve a competitive advantage in the market?

11. Other ways of achieving a competitive advantage
Product design and development
Pricing
Promotion
Place in the marketing mix
Economies of scale
Quality of production

12. Other ways of achieving a competitive advantage
Delivery times including JIT
The skill and motivation of workers
Low cost labour
Flexible work force
Ethical stance of the business.

13. Hit or Miss? Cadbury’s New Product Launch

14. 1. Identify three reasons why these two new products may succeed in the
marketplace.
2. Identify three reasons why these new products may fail.
3. On balance, do you think that these two products will still be in the shops in a
year’s time? Or will they have flopped?
4. Whether or not the products prove a success, is Cadbury’s doing the right thing
in attempting to provide chocolate bars with a more healthy image?
5. Cadbury’s faces four threats that are outside its control:
 the economy is very weak
 people are very concerned about their weight and health
 prices of ingredients such as cocoa and sugar are rising steeply
 the company faces strong competition from big firms such as Mars and Nestle
Which of these factors poses the biggest threat to Cadbury?
Explain your answer.

15. To Achieving Competitive Advantage:
1. Innovation [being the first]
2. Reputation [by developing a brand image]
3. Relationships [treating others fairly]
- with staff
- with customers
- with suppliers