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The  Five  Generic  Competitive  Strategies
“ Competitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value.” Michael E. Porter
Strategy  and Competitive  Advantage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Key to Gaining a Competitive Advantage
What  Is “Competitive  Strategy”? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
5  Generic Competitive  Strategies
Low-cost leadership means  Low overall costs,   not just low manufacturing  or production costs!
[object Object],[object Object],[object Object],Low-Cost -  Keys to Success
Nucor  Corporation’s Low-Cost  Provider  Strategy  Eliminate some production processes from value chain used by traditional integrated steel mills; cut investment in facilities and equipment  Strive hard for continuous improvement in the efficiency of its plants and frequently invest in state-of-the art equipment to reduce unit costs Carefully select plant sites to minimize inbound and outbound shipping costs and to take advantage of low rates for electricity Hire a nonunion workforce that uses team-based incentive compensation systems Heavily emphasize consistent product quality and maintain rigorous quality systems Minimize general and administrative expenses by maintaining a lean staff at corporate headquarters and allowing only 4 levels of management
[object Object],[object Object],Approaches  to  Securing  a  Cost  Advantage Approach  1 Approach  2 Control costs! By-pass costs!
Approach  1:  Controlling the  Cost  Drivers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Approach  2:  Revamping the  Value  Chain ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Keys  to  Success  in  Achieving Low-Cost  Leadership ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
When  Does  a  Low-Cost Strategy  Work  Best? ,[object Object],[object Object],[object Object],[object Object],[object Object]
Pitfalls  of  Low-Cost  Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Differentiation  Strategies ,[object Object],Objective
Benefits  of  Successful  Differentiation ,[object Object],[object Object],[object Object],[object Object],[object Object]
Types  of  Differentiation  Themes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sustaining  Differentiation:  Keys  to  Competitive  Advantage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Where  to  Find  Differentiation  Opportunities  in  the  Value  Chain ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Internally Performed Activities,  Costs, & Margins Activities,  Costs, & Margins of Suppliers Buyer/User Value Chains Activities, Costs, & Margins of Forward Channel Allies & Strategic Partners
How  to  Achieve  a Differentiation-Based  Advantage Approach  1 Incorporate features/attributes that  raise the performance a buyer gets  out of the product Approach  2 Incorporate features/attributes that  enhance buyer satisfaction  in non-economic or intangible ways Approach  3 Compete on the basis of  superior capabilities Approach  4 Incorporate product features/attributes that lower buyer’s overall costs  of using product
Importance  of  Perceived  Value ,[object Object],[object Object],[object Object],[object Object]
When  Does  a  Differentiation Strategy  Work  Best? ,[object Object],[object Object],[object Object],[object Object]
When  Does  a  Differentiation Strategy  Work  Best? ,[object Object],[object Object],[object Object],[object Object]
Pitfalls  of Differentiation  Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Best-Cost  Provider  Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],Objectives
[object Object],[object Object],[object Object],[object Object],[object Object],Competitive  Strength  of  a   Best-Cost  Provider  Strategy
[object Object],[object Object],[object Object],Risk  of  a  Best-Cost Provider  Strategy
Focus / Niche  Strategies ,[object Object],[object Object],[object Object],[object Object],Objective Keys to Success
[object Object],[object Object],[object Object],Approaches  to  Defining a  Market  Niche
Examples  of  Focus  Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Focus / Niche  Strategies and  Competitive  Advantage ,[object Object],[object Object],[object Object],[object Object],Approach 1 Approach 2 Which hat is  unique?
What  Makes  a  Niche Attractive  for  Focusing? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Risks  of  a  Focus  Strategy ,[object Object],[object Object],[object Object]
Deciding  Which  Generic  Competitive  Strategy  to  Use ,[object Object],[object Object],[object Object],[object Object],[object Object]
Deciding  Which  Generic  Competitive  Strategy  to  Use ,[object Object],[object Object],[object Object],[object Object],[object Object],The  big risk  – Selecting a  “stuck in the middle”  strategy!  This  rarely produces  a  sustainable competitive advantage  or a  distinctive competitive position.
Beyond  Competitive  Strategy Other  Important  Strategy  Choices
“ Successful business strategy is about actively shaping the game you play, not just playing the game you find.” The Koran
Fig.  6.1:  A  Company’s  Menu  of  Strategy  Options
Strategic  Alliances  and  Collaborative  Partnerships  ,[object Object]
Alliances  Can  Enhance  a Firm’s  Competitiveness ,[object Object],[object Object],[object Object],[object Object]
Capturing  the  Full  Potential of  a  Strategic  Alliance ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Why  Are  Strategic  Alliances  Formed?  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Potential  Benefits  of  Alliances  to  Achieve  Global  and  Industry  Leadership ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Why  Alliances  Fail ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Merger  and  Acquisition  Strategies  ,[object Object],[object Object]
Objectives  of  Mergers and  Acquisitions ,[object Object],[object Object],[object Object],[object Object],[object Object]
Pitfalls  of  Mergers and  Acquisitions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Vertical  Integration  Strategies ,[object Object],[object Object],[object Object],[object Object],Internally Performed Activities,  Costs, & Margins Activities,  Costs, & Margins of Suppliers Buyer/User Value Chains Activities, Costs, & Margins of Forward Channel Allies & Strategic Partners
Strategic  Advantages of  Backward  Integration ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategic  Advantages of  Forward  Integration ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategic  Disadvantages of  Vertical  Integration ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],Pros  and  Cons  of Integration  vs.  De-Integration Many companies are finding that de-integrating   value chain activities is a more flexible, economic strategic option!
Outsourcing  Strategies ,[object Object],Concept Internally Performed Activities Suppliers Support Services Functional Activities Distributors or Retailers
When  Does  Outsourcing Make  Strategic  Sense? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategic  Advantages  of  Outsourcing ,[object Object],[object Object],[object Object],[object Object],[object Object]
Pitfalls  of  Outsourcing ,[object Object],[object Object],[object Object]
Offensive  and  Defensive  Strategies ,[object Object],[object Object],Offensive Strategies Defensive Strategies
Types  of  Offensive  Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Attacking  Competitor  Strengths Objectives Challenging strong competitors with a lower price is foolhardy unless the aggressor has a  cost advantage   or advantage of  greater financial strength! ,[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Options  for  Attacking a  Competitor’s  Strengths
Attacking  Competitor  Weaknesses ,[object Object],[object Object],Weaknesses to Attack ,[object Object],[object Object],[object Object],[object Object],[object Object],Objective
Launching  Simultaneous Offensives  on  Many  Fronts A  challenger  with  superior resources  can  overpower weaker rivals  by  out-competing them  across-the-board long enough to become a market leader! Objective ,[object Object],[object Object],[object Object],[object Object]
End-Run  Offensives ,[object Object],[object Object],[object Object],Objectives
Approaches  for End-Run  Offensives ,[object Object],[object Object],[object Object],[object Object]
[object Object],Guerrilla  Offenses Well-suited to small challengers with limited resources and market visibility Approach Appeal
Options  for  Guerrilla  Offenses ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Preemptive  Strikes ,[object Object],Approach
Preemptive  Strike  Options ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Choosing  Rivals  to  Attack ,[object Object],[object Object],[object Object],[object Object],[object Object]
Using  Offensive  Strategy  to  Achieve  Competitive  Advantage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Defensive  Strategy Objectives ,[object Object],[object Object],[object Object],Approaches ,[object Object],[object Object]
Block  Avenues  Open  to  Challengers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Signal  Challengers  Retaliation  Is  Likely ,[object Object],[object Object],[object Object],[object Object]
Strategies  for Using  the  Internet ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Using  the  Internet  to Disseminate  Product  Information ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Using  the  Internet  as  a Minor  Distribution  Channel  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Brick-and-Click  Strategies:  An Appealing  Middle  Ground  Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Strategies  for  Online  Enterprises ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Choosing  Appropriate Functional-Area  Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
First-Mover  Advantages ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
First-Mover  Disadvantages ,[object Object],[object Object],[object Object],[object Object]
Timing  and  Competitive  Advantage Principle 1 Being a fast follower can sometimes yield as good a result as being a first mover Principle 2 Being a late-mover may or may not be fatal --  it varies with the situation Principle 3 Being a fast follower can sometimes yield as good a result as being a first mover

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Topic3 Genrc Other Strtgs

  • 1. The Five Generic Competitive Strategies
  • 2. “ Competitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value.” Michael E. Porter
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  • 5. 5 Generic Competitive Strategies
  • 6. Low-cost leadership means Low overall costs, not just low manufacturing or production costs!
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  • 8. Nucor Corporation’s Low-Cost Provider Strategy Eliminate some production processes from value chain used by traditional integrated steel mills; cut investment in facilities and equipment Strive hard for continuous improvement in the efficiency of its plants and frequently invest in state-of-the art equipment to reduce unit costs Carefully select plant sites to minimize inbound and outbound shipping costs and to take advantage of low rates for electricity Hire a nonunion workforce that uses team-based incentive compensation systems Heavily emphasize consistent product quality and maintain rigorous quality systems Minimize general and administrative expenses by maintaining a lean staff at corporate headquarters and allowing only 4 levels of management
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  • 20. How to Achieve a Differentiation-Based Advantage Approach 1 Incorporate features/attributes that raise the performance a buyer gets out of the product Approach 2 Incorporate features/attributes that enhance buyer satisfaction in non-economic or intangible ways Approach 3 Compete on the basis of superior capabilities Approach 4 Incorporate product features/attributes that lower buyer’s overall costs of using product
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  • 36. Beyond Competitive Strategy Other Important Strategy Choices
  • 37. “ Successful business strategy is about actively shaping the game you play, not just playing the game you find.” The Koran
  • 38. Fig. 6.1: A Company’s Menu of Strategy Options
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  • 82. Timing and Competitive Advantage Principle 1 Being a fast follower can sometimes yield as good a result as being a first mover Principle 2 Being a late-mover may or may not be fatal -- it varies with the situation Principle 3 Being a fast follower can sometimes yield as good a result as being a first mover