Generic Strategies Flashcards
(21 cards)
Determining Competitive Positioning
- Strategy is all about how to find ____
- This lies at the intersection of 1. 2. 3.
- a valuable competitve position
- the capabilities that a firm has 2. what the market opportunities are 3. and it also has to intersect with the values, the mission and the purpose of the firm …
Many planning experts believe that the general philosophy of doing business
declared by the firm in the mission statement must be translated into a _______________before it can be further defined in terms of a specific long-term strategy.
The term for this is _____
holistic statement of the firm’s strategic orientation
Generic Strategy
any
long-term strategy should derive from a firm’s attempt to seek a competitive
advantagg based on one of three generic strategies:
1
2
3
A. Striving for overall low-cost leadership in the industry.
B. Striving to create and market unique products for varied customer groups
through differentiation.
C. Striving to have special appeal to one or more groups of consumers or
industrial buyers, focusing on their cost or differentiation concerns.
Generic Competitive Positions
Generic Competitive Positions -
Axis 1: Source of Advantage
Cost/Profit of:
Industy Average
Low Cost Firm
Differentiator
$5/$1
$4/$2
$6/$2
Generic Competitive Positions - Axis 2:
Competitive Scope
The extent to which a firm targets______
Industries may be segmented into_______
For instance:
multiple product market segments within an industry.
individual product markets.
multiple geographic markets,
segmenting the types of products or
services offered based on buyer
preferences, offering broader scope of
products or services in order to cater to
each different type of buyer or buyer
groups (e.g. age, gender, etc.) …
Cost Leadership
- what they do
- what they offer
Examples:
Keeping costs lower than those of competitors to generate rents
vis-a-vis the marginal producer.
Tend to offer standardized products with broadly acceptable product features at the lowest price.
Walmart, Dell
Differentiation
- what they do
- what they offer
Examples:
Generating rents from higher consumer willingness-to-pay.
Command price premium from unique features. high quality.
service and/or “prestige.”
Apple, Nike, Goldman
Focused
Low-Cost
- what they do
- strategy used for
Examples:
Keeping costs lower than those of competitors in a narrow segment of the market.
Often used as an entry strategy by foreign firms and new ventures into advanced markets.
Budget Airlines,
Generic Drugs, Kia
Niche
Generating rents from
by t
Examples:
higher consumer willingness-to-pay
argeting a small. often premium
segment of the market.
Porsche, Tiffany’s,
Boutique Consultancies
What are the different strategic approaches that a firm can take when it is occupying a particular
competitive position?
Cost
Leadership
- Engage In
- Build
- Use
- Minimize
- State-of-the-art
cost-cutting
- Wal-Mart
■ market share to gain EOS
- Anheuser-Busch
■ low-cost inputs, offshorlng
- Wal-Mart, Dell
■ overhead such as R&D, advertising
- Dell
■ operations/continuous improvement
What are the different strategic approaches that a firm can take when it is occupying a particular
competitive position?
Differentiation
- Create
- Develop
- Invest in
■ brand through advertising
- Nike
• innovative capability
- Intel, Apple
• human resources, R&D
- Goldman
What are the different strategic approaches that a firm can take when it is occupying a particular
competitive position?
Focused
Low-Cost
- Deter rivalry by
- Capture
dividing market
- Budget airlines
■ narrow economies of scale
- Generic drugs
What are the different strategic approaches that a firm can take when it is occupying a particular
competitive position?
Niche
- Gain
- Build
■ knowledge and expertise
- Juniper Networks
• brand loyalty
- Porsche
Integrated Strategies
Offering ____ at _______
Example:
Strategic approaches:
1
2
Beware
Getting unstuck
differentiated products / low cost
Toyota
• Adopt total quality management or
lean production techniques
• Invest heavily in R&D / innovation
getting “stuck in the
middle”! -when costs
are too high to compete with the
low-cost leader or when its products
and services aren’t differentiated
enough to compete with the
differentiator.
means choosing which
competitive advantage to pursue and
then doing so by aligning resource,
capabilities, and core competencies.
Treacy &
Wiersema’s Generic Strategies
Operational Excellence
This strategy attempts to
Operational excellence refers to
Examples of such organizations are:
lead the industry in price and convenience by pursuing a
focus on lean and efficient operations.
providing
customers with convenient and reliable products or services at competitive prices.
Walmart and FedEx.
Treacy &
Wiersema’s Generic Strategies
Customer Intimacy
means continually
involves
Examples of such
organizations are:
tailoring and shaping products and services
to fit an increasingly refined definition of the customer.
offerings tailored to match the demands of identified niches
Home Depot and Nordstrom.
Treacy &
Wiersema’s Generic Strategies
what
1
2
3
Companies that specialize in one of these disciplines, while simultaneously meeting
industry standards in the other two, gain a sustainable lead in their markets.
operational excellence
Customer intimacy
Product leadership
Treacy &
Wiersema’s Generic Strategies
Product Leadership
Companies that pursue the discipline of product leadership strive to
Product leadership, involves
Examples of leading companies are:
produce
continuous state-of-the-art products and services.
offering customers leading-edge products and services that make rivals’ goods
obsolete.
Apple and Bang & Olufsen.
So Which Competitive Position is Best? {Contd.)
• What favorable strategic opportunities exist? In other words,
which positions are better than others?
• How contested is a position? Is there enough to allow us to
defend a position once we enter?
• New markets/ uncontested market positions
• Existing markets and positions/ contested
• Can we establish this competitive position?
• Do we have the capabilities to execute especially vis-a-vis rivals?
• Can we create value in unique ways versus established competitors?
• Can we defend this position once established?
• How sustainable is any competitive advantage we may have?
• How is the industry likely to evolve?
answer Qs
In Summary
- Positions, like markets, are defined both
- Industries often have
- Profitable positions rely on
- Firms can
- The challenge of strategy is to
- by market needs and ways of delivering on those needs.
- more than one profitable position.
- favorable industry structure and/or superior capabilities.
- combine multiple positions, but need a strategic logic for the combination.
- capture these valuable, defensible competitive positions.
