Strategic Elements of Competitive Advantage

1341 Words Oct 8th, 2010 6 Pages
Strategic Elements of Competitive Advantage

IKEA

ü IKEA confront competitors such as supermarkets (Wal-Mart) and other furniture co.

ü they focused on 3 areas for improvement: product assortment, customer service and product availability.

ü Prices are affordable to almost everyone;

ü colors blue and yellow are Sweden national colors;

ü customers see the furniture in showrooms and with names instead of model numbers;

ü shopping is a self-service activity –browse, u write names and look up for them at the lowest level where everything is in flat packs in kit forms that you have to assemble at home.

ü Most Ikeas have children play area, restaurant, baby care and grocery store.

THE ESSENCE OF MARKETING
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ii. Manifests in:

1. Price competition

2. Advertising battles

3. Product positioning

4. Attempts at differentiation

iii. Forces co. to rationalize costs (positive force)

iv. Drives down prices, profitability and creates instability in the industry (negative factor)

COMPETITIVE ADVANTAGE

Exists when there is a match between a firm’s distinctive competencies and the factors critical for success within its industry. There are 2 basic ways to achieve advantage:

ü With a low-cost strategy that enables it to offer products at lower prices than competitors

ü With a strategy of differentiating products so that customers perceive unique benefits, often accompanied by a premium price

Models:

1. Generic strategies for creating competitive advantage:

a. Michael Porter created 4 generic strategies:

i. Cost leadership

ii. Product differentiation

iii. Cost focus

iv. Focused differentiation.

b. Broad market strategies: COST LEADERSHIP AND DIFFERENTIATION.

i. A competitive
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