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BA_315_LN_9C_STRATEGY__AND_COMPETITIVE__ADVANTAGE

BA_315_LN_9C_STRATEGY__AND_COMPETITIVE__ADVANTAGE -...

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1 S S T T R R A A T T E E G G Y Y A A N N D D C C O O M M P P E E T T I I T T I I V V E E A A D D V V A A N N T T A A G G E E Lecture Notes #9C BA 315: Economy, Industry, and Competitive Analysis Source: Chapter 5, Strategic Competition : A Primis created by Ali Emami from: Thompson and Strickland. Strategic management: Concepts and Cases , 13 th Edition, Irwin/McGraw-Hill New York. 2003. Screen graphics created by: Jana F. Kuzmicki, PhD, Mississippi University for Women Department of Finance Charles H. Lundquist College of Business University of Oregon
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2 “The essence of strategy lies in creating tomorrow’s competitive advantages faster than competitors mimic the ones you possess today.” Gary Hamel and C.K. Prahalad “Strategies for taking the hill won’t necessarily hold it.” Amar Bhide “Quote”
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3 LECTURE OUTLINE Five Generic Competitive Strategies Î Low-Cost Leadership Strategy Î Broad Differentiation Strategies Î Best-Cost Provider Strategies Î Focused Low-Cost Strategies Î Focused Differentiation Strategies Vertical Integration Strategies Merger and Acquisition Strategies Cooperative Strategies Offensive and Defensive Strategies First-Mover Advantages and Disadvantages
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4 Strategy and Competitive Advantage Competitive advantage exists when a firm’s strategy gives it an edge in Î Defending against competitive forces and Î Securing customers Convince customers firm’s product / service offers superior value Î Offer buyers a good product at a lower price Î Use differentiation to provide a better product buyers think is worth a premium price Key to Gaining a Competitive Advantage
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5 What is “Competitive Strategy”? Consists of a company’s market initiatives and business approaches to Î Attract and please customers Î Withstand competitive pressures Î Strengthen market position Includes offensive and defensive moves to Î Counter actions of key rivals Î Shift resources to improve long-term market position Î Respond to prevailing market conditions Narrower in scope than business strategy Objectives of Competitive Strategy Build a competitive advantage Cultivate clientele of loyal customers Knock the socks off rivals , ethically and honorably
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6 Figure 5.1: The Five Generic Competitive Strategies Market Target Type of Advantage Sought Overall Low-Cost Provider Strategy Broad Differentiation Strategy Focused Low-Cost Strategy Focused Differentiation Strategy Best-Cost Provider Strategy Lower Cost Differentiation Broad Range of Buyers Narrow Buyer Segment or Niche
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7 Table 5-1: Distinctive Features of the Five Generic Competitive Strategies Which hat is unique?
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8 Low-Cost Leadership Make achievement of low-cost relative to rivals the theme of firm’s business strategy Find ways to drive costs out of business year-after-year Options: Achieving a Low-Cost Strategy Open up a sustainable cost advantage over rivals, using lower-cost edge to either Î Under-price rivals and reap market share gains Or Î Earn higher profit margin selling at going price
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