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Strategic Business Competitiveness: Paths to Differentiation and Cost Leadership

Explore the essential competitive strategies of cost leadership, differentiation, and niche focus in various industry contexts, including emerging, mature, and scattered markets. Learn how to achieve competitive advantage through low cost and valuable differentiation while navigating potential disadvantages and industry features.

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Strategic Business Competitiveness: Paths to Differentiation and Cost Leadership

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  1. Lecture 7Competitive Strategies

  2. Sources of competitive advantage Low cost Differentiation Cost Leadership Differentiation Niche/focus Broad market Scope of competition Niche market Generic strategies of Porter

  3. Cost Leadership • Competitive advantage: low cost • Price strategy • profit of low cost company • Context • Customer sensitive to price • Few ways to achieve differentiation • Customer not care for brands • A lot of bargaining

  4. How to achieve low cost • Scale economic and Learning curve（experience curve） • Scale economic: Limited by the nature of the business, products, market, and the management • Experience curve: familiarity, specialization, tacit knowledge, innovation, standard • The difference between companies in learning

  5. Reduce transaction cost • others • The design of the products and process • Take full advantage of the capacity • The site of the business • The time of entering

  6. Disadvantages of cost leadership • Cost leadership and the price war • Cost leadership and the profit

  7. Differentiation Strategy • Competitive advantages: differentiation • Sources of differentiations • The categories of differentiation • The differentiated products and differentiated customers • Valuable differentiation • Identified by customer • Not easy to copy • Reasonable price premium

  8. Disadvantages of differentiation strategy • Can not be appreciated by the market • Too high price/premium • Disharmony of the value chain • Easy to be copied by others • Innovation and differentiation

  9. Niche strategy • Concentrated in one or several market segments • Provide value for certain customers • Closely cooperate with customers

  10. Competitive strategies and industrial features • Emerging industries • Mature industries • Scattered industries

  11. Emerging industries • Features of this kind of industries • Instability of tech • Lack of perfect cooperation system • Lack of industrial standard • Need a lot of investment, market cultivation • Key points of strategies • Concentration of resources • Building industry structure, industrial standard and order • Change the entry barrier (Critical mass） • Proper time of enter (Game theory)

  12. Mature industries • Relative mature of tech (Microwave oven) • Large market size, usually • Scattered industries • Lots of company with small scale

  13. Disasters in competitive strategies • same strategies applied by all competitors • Bottle-neck in applying some strategies • Assessment of the strategies • local competition to international competition

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