10. What are the five generic competitive strategies? Briefly describe each one and identify the type of competitive advantage that each strategy is aimed at achieving. a. a low-cost provider strategy: striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers, usually by under-pricing rivals. b. a broad differentiation strategy: seeking to differentiate the company’s product or service from rivals’ in ways that will appeal to a broad spectrum of buyers. c. a focused low cost strategy: concentrating on a narrow buyer segment and outcompeting rivals by having lower costs than rivals and thus being able to serve niche members at a lower price. d. focused differentiation strategy: concentrating …show more content…
23. What are the strategic advantages of a backward vertical integration strategy? * Better quality product/service offering * Improves the caliber of customer service * Enhance the performance of final product * Spare the company the uncertainty of relying on suppliers for crucial components/support services * Lessen the company’s vulnerability to powerful suppliers 24. What are the strategic advantages of a forward vertical integration strategy? * Lower distribution costs * Relative cost advantage over rivals * Higher margins * Lower selling prices to end users 25. What are the merits of outsourcing the performance of certain value chain activities as opposed to performing them in-house? Under what circumstances does outsourcing make good strategic sense? * Activity can be performed better by outside specialists * Activity is not crucial to the firm’s ability to achieve sustainable competitive advantage * It improves organizational flexibility and speeds time to market * Reduces the risk exposure to changing technology and/or buyer preferences * Allows a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does best. 26. Identify and briefly explain 5 types of offensive
LO2.3: In most cases companies produces different goods and services for a certain group of people or customers. Businesses can follow different targeting strategies like differentiated or selected marketing, niche/concentration
In other words, customers are willing to purchase low-tech products as long as their prices are relatively low. As a result, Niche Cost Leadership seems to be the most appropriate strategy for these two segments.
We chose Broad Differentiator as the basic strategy for our company. Through this strategy, our company will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products affordably, we can gain customers’ loyalty and awareness.
Similarly, both companies had a product differentiation strategy, with the aim of being distinctly set apart from their competitors by the viewing market. However, different elements of this strategy were focused on by the firms. For instance,
After I performed an internet search for “low-cost provider” 3 companies that are pursuing a low-cost strategy in their respective industries that stood out to me were Walmart, McDonald’s, and IKEA. These firms have achieved competitive advantage. Walmart has achieved competitive advantage by using the low cost provider strategy and providing consumer products at lower prices. Walmart’s slogan “Save Money, Live Better” shows the company’s strategy. In order for Walmart to produce reasonable price products, the company buys from cheap domestic suppliers and low-wage foreign markets which allow Walmart to sell products at low prices.
Our team decided to choose the “Broad Differentiation” strategy as the basic strategy for our company. We will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products with an affordable price, we can gain something that is beneficial for the company in the future, which is customers’ loyalty and awareness. We may change or modify our strategy for the next round depending how it performs against our competitors.
Thompson, Peteraf, Gamble, and Strickland (2012) found that competitive strategy depend on whether a company’s target market is narrow or broad, and whether a company is seeking competitive advantage through low-cost or product differentiation. These two factors reveal five generic competitive strategies. The five strategies are Overall Low-Cost Provider Strategy, Focused Low-Cost Strategy, Broad Differentiation Strategy, Focused Differentiation Strategy, and Best Cost
While playing the BSG I found the best strategy was the best-cost provider strategy. Using the best-cost strategy allowed me to continue using a decent amount of superior material while also offering prices that were below or around the same price as my competitors. My shoes where not the highest quality or most expensive, but it was also made with a small amount of superior material so it was also not the cheapest made shoe available. This strategy worked best because it attracted buyers who wanted a good quality shoe but did not want to pay high quality prices. Since there were so many companies offering the same product, offering a medium-quality product at a lower price helped my company to gain more customers and market share. A focused differentiation strategy worked least well. Concentrating on one niche results in a company missing out on potential customers. Competitors working outside of the niche will eventually find ways to match the firm’s capabilities in serving the target niche. If the wants and needs of the target market start to switch over time, entry into the focused market can become easier for competitors as people look for different products and services.
Chapter Five describes the five basic competitive strategy options – which of the five to employ is a company’s first and foremost choice in crafting overall strategy and beginning its quest for competitive advantage.
The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments.
The focused low cost strategy purposed to create a price advantage for the company. Usually, a company that use this kind of strategy more focus on a specific market niche, offering products to a narrow market segment instead of a broad one. The company then aims to be the cheapest supplier in the particular niche but not necessarily in the overall market.
The five generic competitive strategies are low-cost provider, broad differentiation, focused low-cost, focused differentiation strategy, and best-cost provider strategy. According to the textbook, “a company’s competitive strategy deals exclusively with the specifics of management’s game plan for competing successfully” (Gamble, 93).
A competitive strategy, or business-level strategy, is the way a business used to successfully enter and penetrate into a market (Eastwood et al, 2006), and also, to succeed in this chosen market against its competitors (Johnson et al, 2014). A company needs to develop and apply appropriate strategy to help the company to generate distinctive competences (David, 2007). Compared with the strategies implemented in other levels of operation, competitive strategy is more focused on the competition against other competitors and strategic choices to better attain market share (Harrison and St. John, 2009). According to
According to Porter (1985) a company can apply three generic types of strategies to protect itself while competitive force is a key issue of the management. To achieve this position a strategy based on competency must be accomplished
The generic strategy allows the firm to react to the five forces better than their competitors (Worthington & Britton, 2006). According to Porter (1985), an organization can enjoy competitive advantage by focusing on the generic competitive strategies. The organization could enjoy competitive edge by either offering the product at low cost or differentiating the product from the competitors or by focusing on a specific market. Porter (1985) emphasized that the generic strategies should be at the centre of the strategic plans.