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GENERIC COMPETITIVE STRATEGIES

GENERIC COMPETITIVE STRATEGIES. COST, LEADERSHIP, DIFFERENTIATION & FOCUS. MMM SEM V. Michael E. Porter. “Father Of The Modern Strategy Field”. Michael E. Porter is a leading authority on competitive strategy; the competitiveness and economic development of nations.

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GENERIC COMPETITIVE STRATEGIES

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  1. GENERIC COMPETITIVE STRATEGIES COST, LEADERSHIP, DIFFERENTIATION & FOCUS MMM SEM V

  2. Michael E. Porter “Father Of The Modern Strategy Field” Michael E. Porter is a leading authority on competitive strategy; the competitiveness and economic development of nations. Krupa Rai

  3. GENERIC COMPETITIVE STRATEGIES Cost Leadership Cost Focus Differentiation Leadership Differentiation Focus Krupa Rai

  4. Scope of Business Products Source of Competitive Advantage Broad Narrow Cost Cost Leadership Cost Focus Differentiation Differentiation Leadership Differentiation Focus Krupa Rai

  5. COST LEADERSHIP • It describes a way to establish the competitive advantage. • Cost leadership, in basic words, means thelowest cost of operationin the industry. • The cost leadership is often driven by company efficiency,size, scale, scope and cumulative experience (learning curve). • Acost leadership strategy aims to exploit scale of production, well defined scope and other economies Eg. producing highly standardized products, using high technology. Krupa Rai

  6. Examples…. Video Krupa Rai

  7. Scope of Business Products Source of Competitive Advantage Broad Narrow Cost Cost Leadership Cost Focus Differentiation Differentiation Leadership Differentiation Focus Krupa Rai

  8. COST FOCUS • Cost focus exploits differences in cost behaviour in segments • The firm can choose to compete in a defined, focused market segment with a narrow scope • In adopting a narrow focus, the company ideally focuses on a few target markets Krupa Rai

  9. WHAT MAKES A SEGMENT ATTRACTIVE FOR FOCUSING? Points to remember…… • Size of the segment is big enough to be profitable • Size of the segment is small enough to be of secondary interest to large rivals • Has good growth potential • Less vulnerable to substitutes • Not crucial to the success of major competitors • Buyers in the segment require specialized expertise OR customized product attributes • No other rivals are concentratingon the segment Krupa Rai

  10. Example…. Krupa Rai

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  12. Scope of Business Products Source of Competitive Advantage Broad Narrow Cost Cost Leadership Cost Focus Differentiation Differentiation Leadership Differentiation Focus Krupa Rai

  13. DIFFERENTIATION LEADERSHIP • Customers perceive the product to be different and better than that of rivals • A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers. • Approaches to differentiation include developing UNIQUE brand images, technology, features, channels, and customer service Krupa Rai

  14. Examples…. Krupa Rai

  15. Examples…. Krupa Rai

  16. Scope of Business Products Source of Competitive Advantage Broad Narrow Cost Cost Leadership Cost Focus Differentiation Differentiation Leadership Differentiation Focus Krupa Rai

  17. DIFFERENTIATION FOCUS • Firms that are successful in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow geographic market segment, or to a particular buyer group or segment • Also target market segments that are less vulnerable tosubstitutes. • Also called a segmentation strategy or niche strategy Krupa Rai

  18. Examples…. Krupa Rai

  19. Scope of Business Products Source of Competitive Advantage Broad Narrow Cost Cost Leadership Cost Focus Cost Leadership Differentiation Differentiation Leadership Differentiation Focus Krupa Rai

  20. BEST COST PROVIDER STRATEGY • Low cost, differentiation markets (a hybrid) • Broad markets and market niches (middle ground) • Value conscious buyers • Those who shy away from cheap, low-end products and expensive high-end products • Willing to pay a fair price for functionality and performance • More for the money Krupa Rai

  21. BEST COST PROVIDER STRATEGY • Positioning near the middle of the market • Combines other basic strategies • Medium quality at below average price, or • Somewhat higher quality at an average or slightly higher price • Adjust strategy for economic conditions, i.e. more value conscious • Match strategy to internal resources and capabilities Krupa Rai

  22. Examples…. Krupa Rai

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  24. http://www.youtube.com/watch?v=UA3C0SK-bEs • http://www.youtube.com/watch?v=6kgMMgqLL24 Krupa Rai

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