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Competitive Strategy

Competitive Strategy. Business-level [Competitive] Strategy. Since we’re in the XYZ industry, how do we compete?. Profit = (Price – Cost) x Qty. Cost or size advantage Differentiation or uniqueness advantage Marketing advantage Innovation advantage Bridge converging industries.

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Competitive Strategy

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  1. Competitive Strategy

  2. Business-level [Competitive] Strategy • Since we’re in the XYZ industry, how do we compete? Profit = (Price – Cost) x Qty. • Cost or size advantage • Differentiation or uniqueness advantage • Marketing advantage • Innovation advantage • Bridge converging industries

  3. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Low Cost Broad Target Market Breadth of Competitive Scope Narrow Target Market

  4. Low-Cost Strategy - Operational Advantage “Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas.” “Steamrollered by Dell”Newsweek, February 21, 2005

  5. Value Chain and Low Cost Strategy Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Marketing & Sales Outbound Logistics Operations MARGIN

  6. Inbound Logistics Highly Efficient Systems to Link Suppliers’ Products with the Firm’s Production Processes Located in Close Proximity with Suppliers Inbound Logistics

  7. Efficient Plant Scale to Minimize Mfg. Costs Timing of Asset Purchases Policy Choice of Plant Technology Organizational Learning Operations Relatively Few Management Layers to Reduce Overhead Firm Infrastructure Effective Training Programs to Improve Worker Efficiency and Effectiveness Human Resource Management MARGIN Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes Technological Development Procurement Frequent Evaluation Processes to Monitor Suppliers’ Performances Efficient Plant Scale to Minimize Manufacturing Costs Delivery Schedule that Reduces Costs Small, Highly Trained Sales Force Service Inbound Logistics Selection of Low Cost Transport Carriers Products Priced to Generate Sales Volume Outbound Logistics Timing of Asset Purchases Operations Operations MARGIN Policy Choice of Plant Technology Efficient Order Sizes Organizational Learning

  8. Outbound Logistics Firm Infrastructure Delivery Schedule that Reduces Costs Human Resource Management Selection of Low Cost Transport Carriers MARGIN Technological Development Efficient Order Sizes Procurement Frequent Evaluation Processes to Monitor Suppliers’ Performances Interrelationships with Sister Units Delivery Schedule that Reduces Costs Small, Highly Trained Sales Force Effective Product Installations to Reduce Frequency and Severity of Recalls Service Outbound Logistics Selection of Low Cost Transport Carriers Products Priced to Generate Sales Volume Marketing & Sales Outbound Logistics MARGIN Efficient Order Sizes National Scale Advertising Interrelationships with Sister Units

  9. Marketing & Sales Firm Infrastructure Small, Highly Trained Sales Force Human Resource Management Products Priced to Generate Sales Volume MARGIN Technological Development Procurement Global Scale Advertising Service Marketing & Sales Outbound Logistics Marketing & Sales Inbound Logistics Operations MARGIN

  10. Coca-Cola Marketing & Sales Firm Infrastructure Small, Highly Trained Sales Force Human Resource Management Products Priced to Generate Sales Volume MARGIN Technological Development Procurement Global Scale Advertising Service Marketing & Sales Outbound Logistics Marketing & Sales Inbound Logistics Operations MARGIN

  11. Service Firm Infrastructure Effective Product Installations to Reduce Recalls Human Resource Management MARGIN Technological Development Procurement Service Service Marketing & Sales Inbound Logistics Outbound Logistics Operations MARGIN

  12. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Procurement Service Procurement Marketing & Sales Inbound Logistics Outbound Logistics Operations MARGIN Frequent Evaluation Processes to Monitor Suppliers’ Performances Systems and Procedures to Find the Lowest Cost Products to Purchase Raw Materials

  13. Firm Infrastructure Human Resource Management MARGIN Technological Development Technological Development Procurement Technological Development Service Easy-to-Use Manufacturing Technologies Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes Outbound Logistics Inbound Logistics Marketing & Sales Operations MARGIN

  14. Firm Infrastructure Human Resource Management Human Resource Management MARGIN Technological Development Human Resource Management Procurement Consistent Policies to Reduce Turnover Costs Effective Training Programs to Improve Worker Efficiency and Effectiveness Service Outbound Logistics Inbound Logistics Marketing & Sales Operations MARGIN

  15. Firm Infrastructure Firm Infrastructure Human Resource Management Support Activities MARGIN Firm Infrastructure Technological Development Cost Effective MIS Systems Simplified Planning Practices to Reduce Planning Costs Relatively Few Management Layers to Reduce Overhead Procurement Service Marketing & Sales Outbound Logistics Inbound Logistics Operations MARGIN

  16. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Broad Target Market Differentiation Breadth of Competitive Scope Narrow Target Market

  17. Differentiation Strategy – Uniqueness Advantage SOUTHWEST

  18. Value Chain and Differentiation Strategy Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Marketing & Sales Outbound Logistics Operations MARGIN

  19. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Operations MARGIN Inbound Logistics Superior handling of incoming raw materials to minimize damageand improve the quality of the final product Inbound Logistics

  20. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Operations MARGIN Operations Consistent manufacturing of attractive products Rapid responses to customers unique manufacturing specifications Operations

  21. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Outbound Logistics Accurate and responsive order processing procedures Rapid and timely product deliveries to customers Outbound Logistics

  22. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Marketing & Sales Strong Coordination among functions in R&D, Marketing and Product Development Extensive personal relationships with buyers Premium Pricing Marketing & Sales

  23. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Service Complete field stocking of replacement parts Service

  24. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Caterpillar vs. Komatsu Service Complete field stocking of replacement parts Service

  25. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Technological Development Technological Development Coordination among R&D, marketing and product development Investments in technol-ogies to produce highly differentiated products Strong capability in basic research

  26. Firm Infrastructure Human Resource Management Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Support Activities Human Resource Management Compensation programs which encourage worker creativity and productivity Extensive use of subjective performance measures Superior personnel training

  27. Firm Infrastructure Human Resource Management MARGIN Technological Development Procurement Service Inbound Logistics Outbound Logistics Marketing & Sales Operations MARGIN Firm Infrastructure Support Activities Firm Infrastructure Highly developed Information Systems to better understand customers’ purchasing preferences A companywide culture emphasizing quality and innovation

  28. Marketing Advantage

  29. Innovation Advantage

  30. Innovation Cycle TimeSlow is good, unless you’re the one driving innovation Growth Rate t1 t2 t3 Time

  31. Differentiated Beef Bluegrass Meadows Beef

  32. Still Perkin’

  33. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Broad Target Market Differentiation Breadth of Competitive Scope Narrow Target Market Cost Leadership Focused Differentiation

  34. Converging Industry Advantage Entertainment Wireless Telephony Palmtop Computing

  35. Razor Trials and Comparisons Try the razors Compare Evaluate

  36. What’s the next big thing? ? Strategic Dimension 2 Strategic Dimension 1

  37. Gillette: More is Better…? 12 Blade

  38. Razors • Design features of razors and shaving performance • Do they make a difference? • Do they create [real or perceived] value? • What are relevant “strategic dimensions” of razor industry? • What needs [real or perceived] do these dimensions fulfill? Strategic Dimension 2 ? Strategic Dimension 1

  39. Pizza Strategy Canvas

  40. Women’s Razor Strategy Canvas

  41. Men’s Razor Strategy Canvas

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