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Strategic Management- Generic Competitive Strategies

Strategic Management- Generic Competitive Strategies

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Published by Mangan
mba vtu 3rd sem notes 5th module.
mba vtu 3rd sem notes 5th module.

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Published by: Mangan on Dec 14, 2009
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11/18/2012

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 The Five Generic Competitive Strategies
 The five distinctive competitive strategies are:1.Low-cost provider strategy2.Broad Differentiation strategy3.Best-cost provider strategy4.A focused (or market niche) strategy based on lowercost5.A focused (or market niche) strategy based ondifferentiation
 
Low-cost provider strategies
A company achieves low-cost leadership when it becomesthe industry's lowest-cost provider. e.g. Nano
It is lower-cost than rivals but not necessarily absolutelowest cost. E.g. Maruti 800 is low cost car but not lowerthan Nano
The product should include features and services thatbuyers consider essential.
A product offerings that is too frill-free sabotages thatattractiveness of the company's product and can turnbuyers off even if it is cheaper than competing products.
 The low-cost has to be achieved in a way that would bedifficult for the competitors to copy for the low-costadvantage to yield valuable edge in the marketplace.
 
 There are two options for translating a low-costadvantage into attractive profit performance:1.Use the lower-cost edge to under pricecompetitors and attract price-sensitive buyers ingreat numbers to increase total profits.
 –
Here the company has to keep the size of the price cutsmaller than the size of the firm's cost advantage(bigger profit margin per unit) or generate enoughadded volumes to increase total profits despite thinnermargins.
1.Maintain the present price, be content with thepresent market share, and use low-cost edge toearn a higher profit margin on each unit sold.

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