Firms tailor their strategies to fit particular circumstances, every firm\u2019s strategy has at least several unique components \u2013 in this sense there are countless strategy variation and options, ultimately yielding as many business strategies as there are businesses. However, when one looks at the basic character of the different strategies that firms employ, the amount of fundamental strategy variation narrows considerably. From this more generalized perspective, it is possible to single out three generic approaches to competing in the marketplace:
The impetus for striving to be the industry\u2019s low-cost producer can drive from sizable economies of scale, strong learning and experience curve effects, other cost-cutting and efficiency-enhancing opportunities, and a market comprised of many price-conscious buyers. Trying to be the industry leader in achieving an overall low-cost position typically entails being out in front of rivals in constructing the most efficient-sized plants, in implementing cost-reducing technological advances, in getting the sales and market share needed to capitalize on learning and experience curve effects, in maintaining a tight rein on overhead and other administrative types of fixed costs, and in containing costs in such areas as R&D, advertising, service, and distribution.
\u2022demand is price elastic;
\u2022all firms in the industry produce essentially the standardized products;
\u2022there are not many ways of achieving product differentiation that have much value to
position because having the lowest costs not only acts as a barrier for a new entrant to hurdle but it also provides the leeway to use price-cutting as a defense against market inroads made by a new competitor;
technology and present strategy, leaving it vulnerable to new state-of-the-art technologies and to a widening of customer interest in something other than a cheaper price.
Strategic success in trying to be low-cost producer usually requires a firm to be the overall cost leader, not just one of the several firms vying for this position. When there is more than one aspiring low-cost producer, rivalry among them is typically fierce.
Forms of differentiating the products from rival firms: a different taste, special features, superior service, spare parts availability, overall value to the customer, engineering design and performance, unusual quality and distinctiveness, product reliability, quality manufacture, technological leadership, convenient payment, a full range of services, a complete line of products, and tope-of-the-line image and reputation.
Differentiation strategy is most likely to produce an attractive and lasting competitive edge when it is based on technical superiority, quality, giving customers more support services, and the appeal of more value for the money.
The distinguishing feature of a focus strategy is that the firm specializes in serving only a portion of the total market. The underlying premise is that a firm can serve its narrow target market more effectively or more efficiently than rivals that position themselves broadly.
The competitive advantage of a focus strategy is earned either by differentiation (better meeting the needs of the target market), achieving lower costs in serving the target market segment, or both.
\u2022No other rival is attempting to specialize in the same target segment;
\u2022Firm\u2019s resources do not permit it to go after a wide segment of the total market;
\u2022Industry segments differ widely in size, growth rate, profitability, and intensity of the
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