The Five Generic Competitive
Chapter 5 describes the five basic competitive strategy options – which of the five to employ is a
company’s first and foremost choice in crafting overall strategy and beginning its quest for
we mean the specifics of management’s game plan for
competing successfully – how it plans to position the company in the marketplace, its
specific efforts to please customers, and improve its competitive strength, and the type of
competitive advantage it wants to establish.
concerns the specifics of
management’s game plan for competing successfully and achieving a competitive
edge over rivals.
A company achieves competitive advantage whenever it has some type of edge over
rivals in attracting buyers and coping with competitive forces.
There are many routes to competitive advantage, but they all involve giving buyers what
they perceive as superior value.
Delivering superior value – whatever form it takes – nearly always requires performing
value chain activities differently than rivals and building competencies and resource
capabilities that are not readily matched.
II. Five Competitive Strategies
There are countless variations in the competitive strategies that companies employ,
mainly because each company’s strategic approach entails custom-designed actions to fit
its own circumstances and industry environment.
The biggest and most important differences among competitive strategies boil down to:
Whether a company’s market target is broad or narrow
Whether the company is pursuing a competitive advantage linked to low costs or
Five distinct competitive strategy approaches stand out:
low-cost provider strategy:
appealing to a broad spectrum of customers based by
being the overall low-cost provider of a product or service
broad differentiation strategy:
seeking to differentiate the company’s
product/service offering from rivals’ in ways that will appeal to a broad spectrum of
best-cost provider strategy:
giving customers more value for the money by
incorporating good-to-excellent product attributes at a lower cost than rivals; the
target is to have the lowest (best) costs and prices compared to rivals offering
products with comparable attributes
focused or market niche strategy based on lower cost:
concentrating on a narrow
buyer segment and outcompeting rivals by serving niche members at a lower cost
focused or market niche strategy based on differentiation:
concentrating on a
narrow buyer segment and outcompeting rivals by offering niche members
customized attributes that meet their tastes and requirements better than rivals
Figure 5.1, The Five Generic Competitive Strategies — Each Stakes Out a Different
Position in the Marketplace
, examines how each of the five strategies stake out a
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