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Overall cost-leadership strategy
Broad differentiation strategy
Focused cost-leadership strategy
Focused differentiation strategy
Best-cost provider strategy
What is business strategy?
Generic competitive strategies that occur at the business level of the organisation
A plan of action that a company follows to gain a competitive advantage
Who is being satisfied?
What is being satisfied?
How are customers being satisfied?
The five generic competitive strategies
Overall low-cost strategy
Strategic choices
pursue a low level of product differentiation
aim at the average customer
engage in a limited amount of market segmentation
increase efficiency and lower costs
develop skills in flexible manufacturing
Overall low-cost strategy (cont’d)
Advantages
as long as price is key to a significant number of buyers
protection from industry competitors and new entrants by cost advantage
less vulnerable to powerful suppliers and increases in the price of inputs
less vulnerable to powerful buyers that may insist on a price reduction
Achieving superior efficiency
Efficiency = outputs inputs
Outputs are goods and services
Inputs include labour, land, capital and technological know-how
Efficiency produces higher productivity and thereby lowers the per unit cost
Maximising resources and minimising wastage
Achieving superior efficiency (cont’d)
Economies of scale
lower unit costs due to large scale production volumes
Scale economies can无忧论文 【http://www.uklunwen.com】 be achieved by:
increasing sales
greater labour specialisation
Minimum efficient scale
Differentiation strategy
Strategic choices
pursue a high level of product differentiation
be responsive to customers through after-sales service and product repair
engage in the maximum amount of market segmentation
develop skills relevant to the source of differentiation
Differentiation strategy (cont’d)
Advantages
protected from industry competitors and new entrants by brand loyalty
less vulnerable to moderate increases in cost of inputs
less vulnerable to powerful buyers because of unique products
Differentiation strategy (cont’d)
Disadvantages
pressure to maintain perceived uniqueness in the eye of customers
competitors may be able to imitate a differentiator’s product
importance of differentiation may diminish over time
Focus strategy
Strategic choices
pursue either a high or a low level of product differentiation
choose a specific niche market or a number of niche markets
develop relevant skills according to adoption of cost leadership or differentiation
Focus strategy (cont’d)
Advantages
protected from industry competitors and new entrants by uniqueness of product or service and customer loyalty
increase in cost of inputs could be passed on to customers
forms a strong relationship with customers and allows for changing customer needs
Focus strategy (cont’d)
Disadvantages
vulnerable to powerful suppliers
production costs can be high relati |
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