Strategic Management In Action

1. Strategic Management In Action Ch 6: Competitive Strategies Group Six: Knowl Richardson Landon Cotham Dustin Eggleston Maddie Ramsey Amber Morris Katy Martin

2. Competitive Strategies • Competition is Present in All Organizations. • Competitive Advantage- Qualities that Set an Organization Apart. • Distinctive Capability- When an Organization Does Something that Others Can’t, or Does it Better than Others Do. • Unique Resource- An Organization Has Something that Other Competitors Don’t.

3. Competitive Strategies • Exploit Competitive Advantages and Current Resources. • Competition- Organizations Battle or Vie for Some Desired Object or Outcome. (Customers, Market Share)

4. 3 Approaches to Defining Competition • Industry Perspective-Focuses on Competitors as Organizations that are Making/Selling the Same or Very Similar Products/Services. • Market Perspective- Views Competitors as Organizations that Satisfy the Same Customer Need.

5. 3 Approaches to Defining Competition • Strategic Groups Perspective- Competitors are Groups of Firms Competing in an Industry with Similar Strategies, Resources, and Customers. • This defines WHO competitors are because the most relevant competitors are in your strategic group.

6. Miles and Snow’s Adaptive Strategies • Based On Strategies that Organizations Use to Adapt to their Uncertain Competitive Environments. • Four Strategic Postures: Prospector, Defender, Analyzer, and Reactor.

7. Prospector • Organization Innovates by Finding and Exploiting New Product/Market Opportunities. • Analyze the Changing Environment to See Future Profit-bearing Actions Now. • Competitors Don’t Know What They’re Going to do Next (MTV).

8. Defender • Used to Protect Current Market Share by Emphasizing Existing Products and Producing a Limited Product Line. • GM reducing lines of vehicles and models offered to lower cost and retain damaged market share. • Do Whatever it Takes to Prevent Competitors from Invading the Market. • Only works if The Product(s) Remain Competitive with Competitors’.

9. Analyzer • Watch For and Copy Successful Ideas of Prospectors and Their Pioneers. • Thoroughly Analyze Business Ideas Before Trying Them.

10. Reactor • Lack of a Coherent Strategy or Apparent Means of Competing. • React to Environmental Change Only when Forced by Environmental Pressures. • Fail to React Quickly Because They Don’t Have the Necessary Resources • NOT Recommended, Seen as a “Default” Strategy. Without Change, Reactor will Always be in a Weak Competitive Position

11. Porter’s Generic Competitive Strategies • Appropriate Competitive Strategy Needed Along with Five Forces Model and Value Chain. • Strategy Based on Competitive Advantage From Only Two Sources: • Having lowest costs in the industry. • Having significant and desirable differences from competitors.

12. Porter’s Generic Competitive Strategies • Generic Competitive Strategies can be Made from Cost Leadership, Differentiation, and Focus. • Why “Generic”? • These strategies can be pursued by any type/size organization in any type/size industry.

13. Cost Leadership Strategy • Organization Strives to Have the Lowest Costs in its Industry and Produce Products for Broad Customer Base. • Not Necessarily Lowest Prices, but With Lowest Costs, can Potentially Charge Lowest Prices and Still Earn Profits. • Allows a Better Position if a Price War Starts.

14. How to be Successful in Cost Leadership Strategy • Be Efficient in All Areas. • Narrow Product Lines Aimed at Average Customer. • Have Plain/Effective Establishments.

15. Disadvantages Of Cost Leadership Strategy • Competitors Could Find Better Cost Cutting Strategy, Taking Away Advantage. • Competitor Might Imitate Cost Leader’s Actions and Erode Advantage. • Cost Leader Might Lose Sight of Changing Customers’ Wants. • It doesn’t matter how efficiently you make products/services if no one wants them.

16. Differentiation Strategy • Provide Unique Products with Features that Customers Value and See as Different, so they Pay a Premium for it. • Compete by Offering Truly Unique Products in Eyes of Customers. • All Resources Concentrate on Isolating and Knowing Specific Market Segments. • Use Multiple Methods to Differentiate Themselves. • Offer Wide Product Lines.

17. Differentiation Strategy • Differentiate Along Many Different Dimensions to Reach All Niches of Market. • Work to Establish Brand Loyalty • Brand Loyalty- When customers consistently and repeatedly seek out, purchase, and use a particular brand. • Unique Resources and Capabilities Tend to be in Marketing and Research & Development

18. Disadvantages of Differentiation Strategy • Can be Costly, Must Manage Costs, but Not Too Much so You Retain Differentiation. • Competitors’ Imitation Products/Services may Affect Uniqueness. • Customers Could Become More Price Sensitive. • Product Differences May Lose Their Importance. • Organization Might Find that Advantage Based on Being Different and Unique no Longer Work.

19. Focus Strategy • Organization Pursues a Cost or Differentiation Advantage but Within a Narrow Customer Group/Segment. • Focus on a Specific Market Niche. • Three Broad Ways to Segment Specialized Market Niches: • Geographical • Type of Customer • Product Line Segment

20. Three Niche Focuses • Geographical Niche- Region or Locality • Midwest Airlines • Customer Niche- Focuses on Specific Group of Customers’ Unique Needs • Christine Columbus- Female Travelers • Product Line Niche- Focus on Specific & Specialized Product Line

21. Advantages to Focus Strategy • Focuser Knows the Market Niche Well • Stay close to customers and respond quickly to changes. • Develop Strong Brand Loyalty • Can Have Niche to Themselves if Competitors Don’t Offer Similar Products/Services

22. Disadvantages of Focus Strategy • Focuser Often Operates on a Small Scale • Hard to lower costs significantly • Niche Customers may Change Taste or Needs • Difficult for focuser to change niches • Focuser is Subject to Being “outfocused” by competition

23. Stuck In The Middle • Organization hasn’t developed a low cost or a differentiation competitive advantage • Costs too high to compete with low cost leader • Products and services aren’t differentiated enough to compete with differentiator • Getting Unstuck: Choosing the right competitive advantage to pursue

24. Contemporary Views on Competitive Strategy • Provide expanded and more realistic description of competitive strategies • Integrated Low Cost-Differentiation Strategy • Simultaneously achieving low costs and high levels of differentiation • Information Systems have opened the door for competing on the basis of having low costs and being unique • Mintzberg’s Generic Competitive Strategies • Six possible competitive strategies • Differentiation: Price, marketing image, Product design, product quality, product support • Undifferentiated

25. Implementing Competitive Strategy • The Role of Functional Strategies • determine competitive strategy through resources and capabilities • Determines how competitive strategy is implemented • A competitive advantage will not be possible without a functional strategy

26. Competitive Actions • Organization will be competing against other organizations through offensive and defensive moves • Offensive moves: organization's attempts to exploit and strengthen its position through attacks on competitor’s position • Defensive moves: organization’s attempts to protect its competitive advantage and market share

27. Evaluating and Changing Competitive Strategy • Strategies must be monitored and evaluated for performance effectiveness and efficiency • Determine what happened and why • Pinpoint area of competitive weakness • If desired levels of performance haven’t been reached, changes may be necessary

28. Summary/Takeaways • Competitive Strategies • Miles and Snow’s Adaptive Strategies • Prospector • Defender • Analyzer • Reactor • Porter’s Generic Competitive Strategies • Cost Leadership • Differentiation Strategy • Focus Strategy

29. Summary/Takeaways • Contemporary Views on Competitive Strategy • Integrated Low-cost Differentiation Strategy • Mintzberg’s Generic Competitive Strategy • Competitive Actions • Offensive Moves • Defensive Moves