The Five Generic Competitive Strategies.docx - 1 The Five Generic Competitive Strategies Low-Cost Provider Strategy Broad Differentiation Strategy

The Five Generic Competitive Strategies.docx - 1 The Five...

This preview shows page 1 - 2 out of 3 pages.

1. The Five Generic Competitive Strategies Low-Cost Provider Strategy Broad Differentiation Strategy Focused Low Cost Strategy Focused Differentiation Strategy Best-Cost Provider Strategy 2. What is Competitive Strategy? 3. Competitive Strategy Competitive Strategy is a long-term action plan for how a firm will compete after evaluating its strengths and weaknesses. Competitive Strategy is defined as a "framework for making decisions that create results in a competitive market.“ The competitive theory was proposed by Michael Porter in 1980 4. Low-Cost Provider Strategy Effective Low-Cost Approaches: Pursue cost-savings that are difficult imitate. Avoid reducing product quality to unacceptable levels. Competitive Advantages and Risks: Greater total profits and increased market share gained from underpricing competitors. Larger profit margins when selling products at prices comparable to and competitive with rivals. Low pricing does not attract enough new buyers. Rival’s retaliatory price cutting set off a price war. 5. Pitfalls of a Low-Cost Provider Strategy Lowering selling prices results in gains that are smaller than the increases in total costs, reducing profits rather than raising them. Relying on a cost advantage that is not sustainable because rivals can copy or otherwise overcome it.
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Spring '12

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes