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˜ Involves a deliberate choice of activities that delivers unique
value to the customer.

˜ It is a framework that guides competitive positioning and gives


organizations a competitive advantage.

˜ Strategy of a company aimed at increasing its competitiveness.


ompetitive strategy consists of moves to:

h Attract customers
h Withstand competitive pressure
h Strengthen firm·s market position
§he objective of a competitive strategy is to generate a
competitive advantage, increase the loyalty of customers and
beat competitors

Five competitive strategies

˜ Overall low-cost leadership strategy


˜ Best cost provider strategy
˜ Broad differentiation strategy
˜ Focused low-cost strategy
˜ Focused differentiation strategy
˜ Strategic management is the conduct of drafting, implementing
and evaluating cross-functional decisions that will enable an
organization to achieve its long-term objectives

˜ It is the process of specifying the organization's mission, vision


and objectives, developing policies and plans, often in terms of
projects and programs, which are designed to achieve these
objectives, and then allocating resources to implement the
policies and plans, projects and programs.

˜ A balanced scorecard is often used to evaluate the overall


performance of the business and its progress
Ôerforming a situation analysis

Self-evaluation

ompetitor analysis
˜ Kelps to measure the effectiveness of the organizational strategy
by conducting SWO§ analysis
˜ an be evaluated against:
h Suitability
h Feasibility
h Acceptability
˜ Suitability deals with the overall rationale of the strategy.
˜ Feasibility is concerned with whether the resources required to
implement the strategy are available, can be developed or
obtained.
˜ Resources include :
h Funding,
h Ôeople,
h §ime
h Information.
˜ Acceptability is concerned with the expectations of the
identified stakeholders with the expected performance
outcomes, which can be return, risk and stakeholder reactions.

h Return deals with the benefits expected by the stakeholders


(financial and non-financial).
h Risk deals with the probability and consequences of failure of a
strategy (financial and non-financial).
h Stakeholder reactions deals with anticipating the likely reaction
of stakeholders.
˜ First published by Michael Ôorter in 1985 in his book
ompetitive Advantage: reating and Sustaining Superior
Ôerformance.
˜ Ôorter called the generic strategies
´ost Leadershipµ
´Differentiationµ
´Focusµ
˜ Ke then subdivided the Focus strategy into two parts: "ost
Focus" and "Differentiation Focus"
˜ §he ost Leadership involves being the leader in terms of cost
in your industry or market.
˜ §his generic strategy calls for being the low cost producer in an
industry.
˜ §here are two main ways of achieving competitive advantage
within a ost Leadership strategy:
i. §he firm sells its products at average industry prices to earn a
profit higher than the rivals .
ii. It charges below the average industry prices to gain market
share.
h ompanies that are successful in achieving ost Leadership
usually have:
˜ Access to the capital needed to invest in technology that will
bring costs down.
˜ Very efficient logistics.
˜ A low cost base (labour, materials, facilities), and a way of
sustainably cutting costs below those of other competitors.
RISK INVOLVED
Other firms may be able to lower their costs as well.
˜ A differentiation strategy calls for the development of a product
or service that offers unique attributes different from the
products of the competition.
h §o make a success of a generic Differentiation strategy,
organizations need:
Good research, development and innovation.
§he ability to deliver high-quality products or services.
Effective sales and marketing, so that the market understands
the benefits offered by the differentiated offerings.
RISK INVOLVED

˜ Imitation by competitors and changes in customer tastes.

˜ Additionally, various firms pursuing focus strategies may be able


to achieve even greater differentiation in their market segments.
˜ §he focus strategy concentrates on a narrow segment(NIKE
MARKE§S) and within that segment attempts to achieve either
a cost advantage or differentiation.

˜ Focus strategies helps understand the market and the unique


needs of customers in it, can be better serviced by focusing
entirely on it.
h ADVAN§AGES

˜ As they serve customers in their market uniquely well, they tend


to build strong brand loyalty amongst their customers.

˜ §his makes their particular market segment less attractive to


competitors.
˜Šudo strategy is an approach to competition that
emphasizes skill, rather than size or strength.
˜ Šudo strategy counsels challengers to keep a low profile and
avoid head-to-head battles that they·re too weak to win.

˜e.g. Ôalm, Netscape


˜ompeting with a stronger player at what he does best is a losing
game.

˜But every champion has areas where he·s weak, often precisely
because he·s invested so heavily in his core strengths.

˜§ake advantage of these weak points to define a game you can


win. e.g. Šuniper Networks
˜One day soon your competitors will see through the puppy dog
ploy, rise to the challenges of a new competitive space and seek to
bring the advantages of superior size and strength into play.

˜By following-through fast, you can postpone this day of reckoning


and make the most of your early lead.

˜e.g. Ôalm
˜By gripping an opponent early, you may succeed in pre-empting
competition: securing victory, in essence, by making it unnecessary
to fight.

˜You can also build relationships with current or future rivals that
limit their room for manoeuvre or allow you to benefit at their
expense.

˜ Both moves will undercut their future ability to attack.

˜e.g. ebay
˜As a judo strategist, the last thing you want is to get locked into a
tit-for-tat struggle.
˜Matching an opponent·s move makes sense in certainsituations:
when you can match for example, or in cases where you can easily
neutralise your opponent·s advantage and recapture the lead.
˜ But if matching means getting dragged into a war of attrition or a
pure trial of strength, then resist the temptation to fight titfor- tat
and strike back on your own terms instead.
˜e.g. ebay
˜Withpush when pulled, you go one step further by using your
opponent·s force or momentum to your advantage.

˜By incorporating a competitor·s products, services or technology


into your attack, you can throw him off-balance and confront him
with a painful choice: whether to abandon his initial strategy or to
watch it fail.

˜e.g. Drypers
˜No matter how skilled you are as a strategist, you are unlikely to
win every skirmish.

˜But losing a battle need not lead to defeat in the war.

˜By beating a strategic retreat, you can conserve your resources


and regroup in better position for the confrontations ahead.

˜e.g. Dublin-based Ryanair


˜Anything that represents a Significant investment can become a
barrier to change.

˜And by exploiting these barriers, you can find the leverage you
need to win.

˜ e.g. Sega
˜asing the old tactic of divide and conquer, sow dissension within
the opposing camp.

˜Set old allies at odds by creating situations where their interests


are no longer aligned.

˜You may have to look carefully but on close inspection even the
most solidlooking bloc is likely to yield up a fissure you can
exploit.

˜e.g. Ôepsi-cola
˜More natural than allowing your competitor·s competitors to wear
him down?

˜After all, as the old saying has it, ´the enemy of my enemy is my
friendµ.

˜But judo strategists don·t just sit back and let someone else do the
job.

˜By staying on the offensive you can craft a strategy using an


opponent·s competitors that he·ll be hard-pressed to match.
K 

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„ §his ompany is earlier known as Kindustan Lever Ltd.
„ §his is India·s largest FMG sector company.
„ 2009 net turnover of company is Rs. 20·239.33 rore which is 47.99% higher than 31st
December 2007·s Rs. 13675.43 rore
„ Ôroducts of KaL are: Ôepsodent,Rexona,Rin,Sunlight,Surfexcel,Vaseline,Wheel, Dove
etc«

  
„ §his ompany was earlier known as Imperial §obacco ompany of India Ltd.
„ ompany mainly operates in the industry like §obacco, Foods, Kotels, Stationary and
Greeting ards with the major products constitutes igarettes, packed foods, hotels, and
apparels.
„ Mar-2009 the turnover of company is at Rs. 15388 rore which is 10.3% higher than
previous year·s Rs. 13947.53 roreï
K 

˜ When we look at the Ôresent segment breakup for both of the


companies then we came to know that their different products vary too
much in the market.

˜ KaL Segment Breakup I§ Segment Breakup


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˜ I§: Its tremendous reach through extensive distribution chain
has been a competitive advantage.
˜ §he company·s e-choupal model for direct procurement is
well known under which I§ partners with over 100,000
farmers for spices and wheat procurement.
˜

Growth Drivers:
˜ KaL: Introduction of premium products and addition of new
consumers via market expansion will be KaL·s growth drivers.
I§ : A rich product mix, along with ramp-up of investments in
its new sectors, will be instrumental in charting I§·s growth
path.
For KaL :
˜ Being an MN operating in India, KaL is more conservative in its
strategies than its Indian counterparts.
˜ Risk of being overtaken by domestic players in various categories.
˜ Ôrolonged inflation may lead to margin contraction.

˜ For I§ :
˜ Increased regulatory clamps on tobacco, along with rising tax burden,
hence the diversification plan into the conventional FMG.
˜ Export ban and rising crop prices pose a threat for its agri-business.
˜ KaL·s up-and-running business model is a treat for investors seeking
exposure in the FMG segment.

˜ I§ is eyeing the pie which KaL and other FMG players currently enjoy.

˜ §hough risky, the company·s business model will pay off in the long run.

˜ I§ should go for more diversification in Non cigarette segment (FMG)


while KaL should come up with the new strategies that could take the new
product forward to create a new segment.

˜ A common recommendation for both is that they should focus on Rural area
more
 % &

mStrong brand communication barrier


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monnect with exact target group
!K mKarness the power of social media
mBuild brand name
 
m Simple but brilliant
m Reach out not as a corporate
brand but as a friend
 m Engage in one-on-one dialogue
  m Build beta customers
  
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m§ata DOOMO countered
Bharti Airtel·s move to slash
roaming rates.

m§ata DOOMO made all


calls for one paisa per second.

mApplicable to both local and


long distance calls, to all
networks and types of phones.
˜ No special packs or pay any
hidden charges to avail this
offer
˜ Roaming charge are
minimum of 50-60 paise per
minute, even when the call
duration is less than a
minute.
˜ §A§A DOOMO
subscribers will be charged
at only 1 paisa per second
˜ OA OLA AND ÔEÔSI
˜ Barriers to Entry
˜ Bottling Network:- oke and
Ôepsio have franchisee agreements
with their existing bottler·s.
˜ Advertising Spend.
˜ Brand Image / Loyalty.
˜ Retailer Shelf Space:-Retailers enjoy
significant margins of 15-20% on
these soft drinks for the shelf space
they offer.
˜ 1960·s and 70·s oke and Ôepsi concentrated on a
differentiation and advertising strategy.

˜ §he ´Ôepsi hallengeµ in 1974 . rapid increase in Ôepsi·s


market share 6 to 14 % of total aS soft-drink sales.

˜ 1990·s bottler·s of oke and Ôepsi employed low priced


strategies in the supermarket channel .

˜ ´Ôepsiµ competing more aggressively in the emerging


economies.
˜ Advertising
˜ oke: $34.4 million (1975) to $211.5 million (1993)
˜ Ôepsi: $25.3 million (1975) to $147.3 million (1993)

˜ Distribution
˜ oke stronger in fountain. But Ôepsi growing in supermarkets.

˜ Ôricing
˜ No differences
˜ Ôepsi's marketing strategy was continuing to win new customers.

˜ Better taste was the main thrust of their advertising.


˜ oke actually developed it from the ground up to taste more
like Ôepsi.

˜ oke having a taste problem with the original recipe.


˜
˜ §he original recipe was dropped.
   

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2  +3, 4+3!,

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˜ 1950: oke have 47% and Ôepsi have 10%
˜ 1970: oke have 35% and Ôepsi have 29%
˜ 1990: oke have 41% and Ôepsi have 32%
˜ 2000:oke have 44%Ôepsi have31.4% other beverage adbury
Schweppes 14.7%
˜ 2006:oke have 43.1% Ôepsi have 31.7% adbury Schweppes
14.5%

˜ Initially through the early 1960s oke was the winner. §he
reason was the extensive bottling franchise. And the second
most important is its brand name.
˜     
       

  
 
 

  

 
 
      





˜ Kingfisher Red (formerly known as Air Deccan) - August 2003

˜ SpiceŠet - May 2005

˜ GoAir ² October 2005

˜ IndiGo Airlines ² August 2006

˜ ŠetLite ² April 2007


˜ §here are two L models:
˜

Independent airlines -

Subsidiary of a legacy airline -


˜
˜ §o take on the legacy carriers
˜ - cost leadership

˜
˜ Differentiation from other Ls
˜ One type of Aircraft

˜ One-class of configuration

˜ Ôoint-to-point connectivity

˜ Least turnaround time


˜

Air Deccan's phenomenal growth spurred the entry of more than


half a dozen low-cost air carriers in India.

˜ Ôassengers can earn frequent flyer miles (called King Miles) for
tickets booked on Kingfisher Red through the King lub loyalty
program run by its parent Kingfisher Airlines.
˜ Sought approval from the ivil Aviation Ministry to fly foreign
destinations including hina, Singapore and the Gulf.

˜ IndiGo is planning to add more food options and beverages


onboard.

˜ §argeting corporate travellers by providing them with flexibility in


booking, cancellation and rescheduling of flights on the lines of
full-fare carriers.
˜ SpiceŠet is seeking permission to start no-frill air services in the
SAAR region.

˜ ompetes with the Indian Railways passenger traveling in air


conditioned coaches.
˜
˜ GoAir started a new premium service known as Go Business

˜ GoAir provides free meals on board to passengers travelling on


Go Business.
Full-service carriers Šet Airways, Air India and Kingfisher are
feeling the heat of competition from these low-cost counterparts
˜ In a bid to counter the budget airlines, full-service carriers have
started offering no-frill air service

˜ All the three full-service carriers have put in additional seats by


converting their two-class configured jet into single class.

˜ §his way they have managed to keep their operational cost and
fleet sizes same while adding capacity in the market.
˜ Sustainability is a framework for responding to the emerging
competitive threats and maintaining competitive advantage.

˜ A competitive strategy consists of moves to

˜ Attract customers

˜ Withstand competitive pressures

˜ Strengthen an organization·s market position


˜ heaper producer:

˜ Better quality:

˜ Newer (more innovative/up to date/fashionable):

˜ Faster (speed to market):

˜ More desirable/ distinctive (successful branding):

˜ Better reputation:

˜ First mover advantages:

—
˜ Advantage comes from understanding and exploiting the
emerging competitive market patterns. §here is scope for
advantage based on:

˜ Search/ scanning capabilities

˜ Analysis/ interpretation capabilities

˜ Risk taking capabilities

˜ Implementation capabilities

˜ hange management capabilities

——
˜ §he ability to do this depends in turn on the effectiveness and
integration of the appropriate key business activities and
processes (distinctive capabilities/ competencies) which underlie
cost competitiveness, quality, innovation, speed to market,
network building, and customer intimacy.
˜ Ôroduction, marketing, logistics, supply chain management,
collaboration, branding, quality, market development, product
development, and innovation.
˜ Which in turn depends on organisational processes and
practices such as KRM, information and decision management,
and relationship management
? Low cost/ differentiation may indeed be the proximate cause
of A but they cannot be the ultimate source.

? KaL is concentrating on innovation to double sales and


sustain its market share

? Nowadays Nokia·s or Dell·s superior returns come


ultimately from something similar, something (scarce and
hard to make more of) which allows them to do things which
enable them to offer a better ¶value for money· proposition
to consumers.

—
˜ A difference that matters

˜ A gap in capabilities

˜ Gap in business system

˜ Gap in R&D and implementation

˜ Sustainable differentiation