CHAPTER 6 Forces managers to create various kinds *Differentiation strategy- the ability of a company or a Late movers Strategy formulation-

n- concerns developing a of growth and retrenchment strategies business unit to provide a unique or superior value to the buyer in terms of product quality, special features, Market Location: Where to Compete corporations mission, objectives, strategies and Used to generate corporate as well as or after sale service policies Market location tactics- where a company implements business strategies *Cost leadership- a lower-cost competitive strategy a strategy Situation Analysis- the process of finding a strategic Business strategy focuses on improving the fit between external opportunities and internal Offensive tactics competitive position of a companys or business units that aims at the broad mass market and requires efficient scale facilities, cost reductions, cost and strengths while working around external and internal products or services within the specific industry or Frontal assault overhead control; avoids marginal customers, cost weaknesses market segment Flanking maneuver minimization in R&D, service, sales force and Niche -Need in the marketplace that is currently Business strategy is comprised of: Bypass attack advertising unsatisfied Competitive strategy Encirclement Differentiation- involves the creation of a product or Corporate Goal --Find propitious niche, &--Strategic Cooperative strategy Guerrilla warfare service that is perceived throughout the industry as window Competitive Strategy -unique. Can be associated with design, brand image, Defensive tactics SWOT- Strengths-Weaknesses-Opportunities-Threats Low cost technology, features, dealer network, or customer Raise structural barriers Internal-Strengths/Weaknesses Differentiation service External-Opportunities/Threats Increase expected retaliation Direct competition *Cost Focus- low-cost competitive strategy that Strategy= opportunity/capacity Lower the inducement for attack focuses on a particular buyer group or geographic Opportunity has no real value unless a company has Focus on niche Cooperative Strategies- used to gain a competitive market and attempts to serve only this niche to the Generic Competitive Strategies -the capacity to take advantage of that opportunity advantage within an industry by working with other exclusion of others Lower Cost strategy->Greater efficiencies than Criticisms of SWOT analysis firms *Differentiation Focus- concentrates on a particular competitors Generates lengthy lists 1.Collusion- the active cooperation of firms within an Differentiation strategy->Unique/superior value, buyer group, product line segment, or geographic industry to reduce output and raise prices to avoid Uses no weights to reflect priorities market to serve the needs of a narrow strategic market quality, features, service economic law of supply and demand Uses ambiguous words and phrases more effectively than its competitors Competitive Advantage -2.Strategic Alliances- a long-term cooperative Same factor can be in 2 categories -Determined by Competitive Scope->Breadth of arrangement between two or more independent firms No obligation to verify opinion with data Issues in Competitive Strategies the target market or business units that engage in business activities for or analysis Stuck in the middle- when a company has no Cost Leadership -mutual economic gain competitive advantage and is doomed to below Requires only a single level of analysis Low-cost competitive strategy (Types of Cooperative Agreements) average performance No logical link to strategy 3.Mutual Service Consortia Broad mass market Entrepreneurial firms follow focus implementation 4.Joint Venture Efficient-scale facilities strategies where they focus their product or service on 5.Licensing Arrangements SFAS summarizes an organizations strategic factors Cost reductions customer needs in a market segment and differentiate 6.Value-Chain Partnerships by combining the external factors from the EFAS Cost minimization based on quality and service Table with the internal factors from the IFAS Table Differentiation Industry Structure and Competitive Strategy Finding a Propitious Niche CHAPTER 7 Broad mass market Fragmented industry- many small- and medium-sized Directional Strategy Propitious niche- where an organization can use its companies compete for relatively small shares of the core competencies to take advantage of a particular Unique product/service Orientation toward growth total market market opportunity and the niche is just large enough Premiums charged Expansion, contraction, status quo Consolidated industry- domination by a few large Less price sensitivity for one firm to satisfy its demand Concentration or diversification companies Cost-Focus Strategic sweet spot- a company is able to satisfy Internal development or acquisitions, mergers, Hyper-competition and Competitive Advantage customers needs in a way that rivals cannot Low-cost competitive strategy or alliances Sustainability Strategic window- a unique market opportunity that is Focus on market segment Competitive advantage in a hyper-competitive market Directional Strategy available for a particular time Niche focused 3 Grand Strategies is characterized by a continuous series of multiple Review of Mission and Objectives Cost advantage in market segment Growth strategies short- term initiatives that replace current products A re-examination of an organizations Differentiation Focus with new products before competitors can do so. Stability strategies current mission and objectives must be made before Specific group or geographic market focus Leads to an over emphasis on short-term tactics Retrenchment strategies alternative strategies can be generated and evaluated Differentiation in target market Competitive Tactics Performance problems can derive from Growth Strategies -Tactic- a specific operating plan that details how a inappropriate (narrow or too broad) mission statements Special needs of narrow target market External mechanisms Stuck in the middle strategy is going to be implemented in terms of when Mergers and objectives No competitive advantage and where it is to be put into action TOWS Matrix- illustrates how the external Acquisitions -Narrower in scope and shorter in time horizon than opportunities and threats can be matched with internal Below-average performance Strategic alliances Porters competitive strategies strategies strengths and weaknesses to result in 4 possible 2 Basic forms *Lower cost strategy- the ability of a company or a strategic alternatives Concentration business unit to design, produce and market a Timing Tactics: When to Compete Provides a means to brainstorm Diversification comparable product more efficiently than its Timing Tactics- when a company implements a alternative strategies Basic Concentration Strategies -competitors strategy Vertical growth First movers

Horizontal growth Vertical Growth - Vertical integration Full integration Taper integration Quasi-integration Long-term contract Backward integration Forward integration Concentration - Horizontal Growth Horizontal integration Basic Diversification Strategies - Concentric Diversification Conglomerate Diversification Concentric Diversification - Growth into related industry Search for synergies Conglomerate diversification - Growth into unrelated industry Concern with financial considerations International Entry Options - Exporting Licensing Franchising Joint Ventures Acquisitions Green-Field Development International Entry Options - Production Sharing Turnkey Operation BOT Concept (Build, Operate, Transfer) Management Contracts Stability Strategies - Pause/proceed with caution No change Profit strategies Retrenchment Strategies - Turnaround Captive Company Strategy Selling out Bankruptcy Liquidation Portfolio Analysis - Resource commitment on best products to ensure

continued success
Resource commitment on new costly products high

risk
Corporate Parenting Strategy - Strategic factors performance improvement Analyze fit