Task 1 for Financial planning

8/6/2019 Task 1 for Financial planning

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Bowman's Strategy Clock Making Sense of Eight Competitive Positions

In many open markets, most goods and services can be purchased from any

number of companies, and customers have a tremendous amount of choice. It's

the job of companies in the market to find their competitive edge and meet

customers needs better than the next company. So, how, given the high degreeof competitiveness among companies in a marketplace, does one company gain

competitive advantage over the others? When there are only a finite number of

unique products and services out there, how do different organizations sell

basically the same things at different prices and with different degrees of

success?

This is a classic question that has been asked for generations of business

professionals. In 1980, Michael Porter published his seminal book, "Competitive

Strategy: Techniques for Analyzing Industries and Competitors", where he

reduced competition down to three classic strategies:

�cost leadership

� product differentiation; and

�market segmentation.

These generic strategies represented the three ways in which an organization

could provide its customers with what they wanted at a better price, or more

effectively than others. Essentially Porter maintained that companies compete

either on price (cost), on perceived value (differentiation), or by focusing on a

very specific customer (market segmentation).

Competing through lower prices or through offering more perceived value became a very popular way to think of competitive advantage. For many

businesspeople, however, these strategies were a bit too general, and they

wanted to think about different value and price combinations in more detailBowman's Strategy Clock The Strategy Clock: Bowman's Competitive Strategy

OptionsThe 'Strategy Clock' is based upon the work of Cliff Bowman (see C. Bowman

and D. Faulkner 'Competitve and Corporate Strategy - Irwin - 1996). It's another



suitable way to analyze a company's competitive position in comparison to the

offerings of competitors. As with Porter's Generic Strategies, Bowman considers

competitive advantage in relation to cost advantage or differentiation advantage.

There are six core strategic options:Option one - low price/low added value.�

likely to be segment specific.Option two - low price.

�risk of price war and low margins/need to be a 'cost leader'.

Option three - Hybrid.�

low cost base and reinvestment in low price and differentiation.Option four - Differentiation.

(a)without a price premium:

� perceived added value by user, yielding market share benefits.

(b)with a price premium:�

perceived added value sufficient to to bear price premium.Option five - focussed differentiation.



� perceived added value to a 'particular segment' warranting a premium

price.Option six - increased price/standard.

�

higher margins if competitors do not value follow/risk of losing marketshare.Option seven - increased price/low values.

�only feasible in a monopoly situation.

Option eight - low value/standard price.�

loss of market share.

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Task 1 for Financial planning