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Competitive Strategies

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Competitive StrategyConsists of a company’s market initiatives and business approaches to Attract and please customers Withstand competitive pressures Strengthen market position

Includes offensive and defensive moves to Counter actions of key rivals Shift resources to improve long-term

market position Respond to prevailing market conditions

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Objectives of Competitive Strategy

Build a competitive advantage

Gain loyal customers

Out perform rivals, ethically and honorably

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Types of Competitive Strategy: Porter’s generic strategies

Market ScopeBroad or NarrowCompetitive advantageLow cost or differentiatedIntegrated differentiated / low cost

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Low-Cost Leadership

Focus on being low-cost relative to rivals

Low overall costs -- not just low manufacturing or production costs.

Need to control and bypass Costs

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Differentiation StrategiesThe objective

For success

How to sustain

Achieving Advantage

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Best Cost Provider Strategies

Emphasis on low-cost and differentiation

The objective

Competitive Strength

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Focus / Niche StrategiesConcentrate on a narrow piece of the market

The objective

Two Approaches Low Cost Differentiation

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Types of growth strategies:Miles and Snow typology

ProspectorSeeks innovationSurvey dynamic environment and

develops new productsCompetitors are uncertain about

prospector’s future decisions and actions

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Types of growth strategies: Miles and Snow typology

Defender Searches for market stability Limited product line Seeks to defend position Prevents others from entering its

turf Can create and maintain niches

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Types of growth strategies: Miles and Snow typology

AnalyzerStrategy of analysis and imitationCopies promising new activitiesReactorLacks a strategic planReacts to environmental changesMakes adjustments when forced toUnable to respond quickly to changes

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Additional Strategic Actions

Cooperative Merger & AcquisitionVertical IntegrationUnbundling/OutsourcingOffensive StrategiesDefensive Strategies

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Cooperative Strategies Strategic Alliances or Collaborative Partnerships

Used to Complement their own strategic

initiatives Strengthen competitiveness

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Merger - Combination and pooling of equals, with newly created firm often taking on a new name

Acquisition - One firm, the acquirer, purchases and absorbs operations of another, the acquired

Merger and Acquisition Strategies

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Vertical Integration StrategiesVertical integration Backward Forward

Amount of integration Full Partial

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Unbundling and Outsourcing Strategies

De-Integration or unbundling involves Narrowing the scope of the firm’s

operations Focusing on performing certain

“core” value chain activities Relying on outsiders to perform the

remaining value chain activities

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Using the Internet

Disseminate Product InformationMinor Distribution ChannelBrick-and-Click StrategiesOnline Enterprises

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Offensive and Defensive Strategies

*Offensive Strategies are Used to build new or stronger market position

and/or create competitive advantage

*Defensive Strategies are Used to protect competitive advantage (rarely

are they the basis for creating advantage)

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Offensive Strategies: Options1. Initiatives to match or exceed competitor

strengths2. Initiatives to capitalize on competitor

weaknesses3. Simultaneous initiatives on many fronts4. End-run offensives5. Guerrilla warfare tactics6. Preemptive strikes

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Offensive Strategies: Choosing Who to Attack

Four types of firms can be the target of a fresh offensive Market leaders Runner-up firms Struggling rivals on verge

of going under Small local or regional

firms not doing a good jobfor their customers

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Defensive Strategies

Objectives

Approaches

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Timing and Competitive Advantage

First Mover

Fast Follower

Late Mover