Topic2.StrategyRevisited

remember porters five forces analysis upf

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Unformatted text preview: fy its organization. •  Last year the company was producing 130,000 brand variations, and 30 percent weren’t making money. •  Last year Nestle cut 50 of its world-wide subsidiaries. •  While Nestle has outpaced competition in sales but still lags in profit margins. **Source: Ball, Deborah. “After Buying Binge, Nestle Goes on a Diet.” The Wall Street Journal. July 23, 2007. pg.A1. UPF - International Strategic Management 2012 102 INDUSTRY-LEVEL STRATEGIES Industry-level strategy is a corporate strategy that addresses the question “How should we compete in this industry?” 51 28/04/12 103 UPF - International Strategic Management 2012 Industry-level strategies a)  Positioning strategies b)  Adaptive strategies !!! Remember: Porter’s Five Forces Analysis UPF - International Strategic Management 2012 104 Industry-level strategies a. Positioning strategies uct/ rod r ar p t lowe il Sim ice a v t ser cos Cost advantage Competitive advantage Price p from remium uniq ue prod u serv ct/ ice Differentiation advantage` 52 28/04/12 UPF - International Strategic Management 2012 105 Industry-level strategies a. Positioning strategies – UPDATED: Cost advantage Competitive advantage Attractive combination of price, features, quality, service ets. Best value offering Differentiation advantage` 106 UPF - International Strategic Management 2012 Industry-level strategies a. Positioning Strategies Type of Competitive Advantage Being Pursued Market Target Lower-cost A Broad CrossSection of Buyers A Narrow Buyer Segment (or Market Niche) Overall Low-Cost Provider Strategy Focused Low-Cost Provider Strategy Differentiation Broad Differentiation Strategy Best-Cost Provider Strategy Focused Differentiation Strategy 53 28/04/12 UPF - International Strategic Management 2012 107 a. Positioning Strategies 1. Overall Low-Cost Provider Strategies •  Meaningfully lower costs than rivals but not necessarily the absolutely lowest possible cost •  Must include features and services that buyers consider essential •  A product offering that is too frills-free sabotages the attractiveness of the company’s product •  Important to pursue cost-saving approaches that are difficult for rivals to copy or match •  Macro factors? E.g. Buyer sensitivity to price… UPF - International Strategic Management 2012 108 a. Positioning Strategies 1. Overall Low-Cost Provider Strategies Translating a Low-Cost Advantage into Higher Profits •  Option 1: Use lower-cost edge to under-price competitors and attract price-sensitive buyers in enough volume increase Σprofits •  Option 2: Refrain from using price cuts to steal sales and market share away from rivals •  Charge a roughly equal price to those of other low-priced rivals •  Rely on the ability to earn a bigger profit margin per unit sold to earn higher total profits and return on investment than rivals 54 28/04/12 UPF - International Strategic Management 2012 109 a. Positioning Strategies 1. Overall Low-Cost Provider Strategies Approaches to Securing a Low-Cost Advantage Approach 1: Perform activities more cost efficiently Examples: •  Economies of scale •  Better production techniques •  Simple product design •  Minimize input costs •  Maximize capacity utilization Approach 2: Revamp value chain to bypass costproducing activities that add little value from the buyer’s perspective Examples: o  Sell direc...
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This note was uploaded on 10/18/2012 for the course BUSI 102 taught by Professor X during the Spring '12 term at Universitat Pompeu Fabra.

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