This lecture discusses strategies for strengthening a business. It defines two main sources of competitive advantage as cost leadership and differentiation. Cost leadership involves having a cost structure that allows operating at a lower cost than competitors. Differentiation means providing unique value to customers through value chain activities. The lecture also discusses evaluating opportunities for competitive advantages based on low costs, differentiation, and rapid response or speed. Key terms related to industry life cycles, diversification, and grand strategies are provided.
This lecture discusses strategies for strengthening a business. It defines two main sources of competitive advantage as cost leadership and differentiation. Cost leadership involves having a cost structure that allows operating at a lower cost than competitors. Differentiation means providing unique value to customers through value chain activities. The lecture also discusses evaluating opportunities for competitive advantages based on low costs, differentiation, and rapid response or speed. Key terms related to industry life cycles, diversification, and grand strategies are provided.
This lecture discusses strategies for strengthening a business. It defines two main sources of competitive advantage as cost leadership and differentiation. Cost leadership involves having a cost structure that allows operating at a lower cost than competitors. Differentiation means providing unique value to customers through value chain activities. The lecture also discusses evaluating opportunities for competitive advantages based on low costs, differentiation, and rapid response or speed. Key terms related to industry life cycles, diversification, and grand strategies are provided.
This lecture discusses strategies for strengthening a business. It defines two main sources of competitive advantage as cost leadership and differentiation. Cost leadership involves having a cost structure that allows operating at a lower cost than competitors. Differentiation means providing unique value to customers through value chain activities. The lecture also discusses evaluating opportunities for competitive advantages based on low costs, differentiation, and rapid response or speed. Key terms related to industry life cycles, diversification, and grand strategies are provided.
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Lecture 6
Strengthening Business strategies
1 Outline: 1)Definitions & types 2)Approaches to enhancing the methods
2 Evaluating and Choosing Business Strategies: Seeking Sustained Competitive Advantage
• The two most prominent sources of competitive
advantage can be found in the business’s cost structure and its ability to differentiate the business from competitors • Businesses that have one or more sources/capabilities that let them operate at a lower cost will consistently outperform their rivals that don’t.
3 Evaluating Cost Leadership Opportunities Business success built on cost leadership requires the business to be able to provide its product or service at a cost below what its competitors can achieve
4 Low-cost Strategies Business strategies that seek to establish long-term competitive advantages by emphasizing and perfecting value chain activities that can be achieved at costs substantially below what competitors are able to match on a sustained basis. This allows the firm, in turn, to compete primarily by charging a price lower than competitors can match and still stay in business.
5 Ex. 8.1 Evaluating a Business’s Cost Leadership Opportunities
6 Sustainable Low-Cost Activities 1. Some low-cost advantages reduce the likelihood of buyers’ pricing pressure 2. Truly sustained low-cost advantages may push rivals into other areas 3. New entrants competing on price must face an entrenched cost leader 4. Low-cost advantages should lessen the attractiveness of substitute products 5. Higher margins allow low-cost producers to withstand supplier cost increases
7 Evaluating Differentiation Differentiation requires that the business have sustainable advantages that allow it to provide buyers with something uniquely valuable to them Differentiation usually arises from one or more activities in the value chain that create a unique value important to buyers Strategists use benchmarking and consider the 5 forces in considering differentiation
8 Evaluating a Business’s Differentiation Opportunities
9 Evaluating Speed as a Competitive Advantage
Speed-based strategies, or rapid
response to customer requests or market and technological changes, have become a major source of competitive advantage for numerous firms in today’s intensely competitive global economy
10 Evaluating a Business’s Rapid Response (Speed) Opportunities
11 Key Terms Concentrated growth Emerging industry Concentric diversification Fragmented industry Conglomerate diversification Global industry Declining industry Grand strategy clusters Differentiation Grand strategy selection matrix Divestiture Growth industry strategies Horizontal acquisition
12 Key Terms (contd.) Innovation Mature industry strategies Joint ventures Product development Liquidation Retrenchment Low-cost strategies Speed-based strategies Market development Strategic alliances Market focus Vertical acquisition
