Professional Documents
Culture Documents
STRATEGIES
Generic Business
Strategies
They operate below corporate level strategies
They are derived from corporate level
strategies
Their manner of operation is determined by the
corporate level strategy based on resources
allocated to them
The business definition provides direction to
business strategies
Definition
Business Strategies are courses of
action adopted by a firm for each
of its businesses separately to
serve identified customer groups
and provide value to the customer
by satisfying their needs
Competitive Strategies
Industry
Structure
Porters
Five Forces
Model
Lower
Cost
Choice of
competitive
strategy
Competitive
Advantage
Positioning of a
firm in the
industry
Competiti
ve Scope
Differentiatio
n
Broad
Target
Narrow
Target
Competitive Scope
Broad
Target
Cost
Leadership
Differentiation
Narrow
Target
Focussed
Cost
leadership
Focussed
Differentiation
Low cost
product/
services
Differentiated
product/ services
Competitive Advantage
Disadvantages
Cost advantage is temporary
Dilute customer focus
Technology changes
Differentiationachievement
Firm offers utility matching customer tastes
and preferences
Lower the overall cost for the buyer
Raise the performance for the buyer
High quality of the product
Distinctiveness- prestige and status
Full range of product/service to satisfy
customer needs
Conditions for
differentiation
Too large market
Customer needs and preferences are too
diversified
Customers are ready to pay a premium
price for the differentiation
Brand loyalty is possible
Benefits of differentiation
Distinctive firms. Customer brand loyaltyprotection from competition
Powerful suppliers- brand loyal customersnot sensitive to price increases
Bargaining power of buyers is less as they
have less options
High price- entry barrier
Substitutes difficult
Focus strategiesachievement
Identifying gaps not covered by cost leaders
and differentiators
Unique skills, efficiency to serve niche
markets
Innovative ways of serving these markets
Conditions
Geographic, demographic or lifestyle based
segment
Specialized requirement
Niche market is big enough to generate
profit
Potential for growth
Major players are not interested