2eIM-LN-Chapter5 - Section 6 C hapter Lecture Notes for...

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369 Section 6 Lecture Notes for Chapter 5 Chapter 5 The Five Generic Competitive Strategies Chapter Summary Chapter Five describes the fi ve basic competitive strategy options – which of the fi ve to employ is a company’s fi rst and foremost choice in crafting overall strategy and beginning its quest for competitive advantage. Lecture Outline I. Introduction 1. There are several basic approaches to competing successfully and gaining a competitive advantage, but they all involve giving buyers what they perceive as superior value compared to the offerings of rival sellers. 2. This chapter describes the fi ve basic competitive strategy option for building competitive advantage and delivering superior value to customers – which of the fi ve to employ is a company’s fi rst and foremost choice in crafting an overall strategy and beginning its quest for competitive advantage. II. Competitive Strategies and Industry Positioning. 1. By competitive strategy we mean the specifi cs of management’s game plan for competing successfully –its offensive and defensive moves to counter the maneuvers of rivals, its responses to whatever market conditions prevail at the moment, and its approach to securing a competitive advantage vis-à-vis rivals. 2. A company achieves competitive advantage whenever it has some unique way of delivering way of delivering superior value to customers. Core Concept A competitive strategy concerns the specif cs oF management’s game plan For competing success- Fully and achieving a competitive advantage over rivals. 3. There are countless variations in the competitive strategies that companies employ, mainly because each company’s strategic approach entails custom-designed actions to fi t its own circumstances and industry environment. 4. The biggest and most important differences among competitive strategies boil down to: a. whether a company’s market target is broad or narrow or 369
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Section 6 Instructor’s Manual for Essentials of Strategic Management 370 b. whether the company is pursuing a competitive advantage linked to low costs or product differentiation. 5. Five distinct competitive strategy approaches stand out: a. A low-cost provider strategy: striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers, usually by under pricing rivals. b. A broad differentiation strategy: seeking to differentiate the company’s product or service from rivals’ in ways that will appeal to a broad spectrum of buyers c. A focused low-cost strategy: concentrating on a narrow buyer segment and outcompeting rivals by serving niche members at a lower cost than rivals d. A focused differentiation strategy: concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals products e. A best-cost provider strategy: giving customers more value for the money by satisfying buyers’ expectations on key qualities/features/performance/service attributes while beating
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This note was uploaded on 10/28/2011 for the course BUSINESS 205 taught by Professor Lewis during the Spring '11 term at AIB College of Business.

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2eIM-LN-Chapter5 - Section 6 C hapter Lecture Notes for...

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