8/24/2018

 Competitive advantage is the leverage that a

business has over its competitors.
 A competitive advantage is an advantage over
competitors gained by offering consumers greater
value, either by means of lower prices or by
providing greater benefits and service that justifies
higher prices

 Most organizations simultaneously pursue

a combination of two or more strategies,
but a combination strategy can be
exceptionally risky if carried too far.
 No organization can afford to pursue all
the strategies that might benefit the firm.
 Difficult decisions must be made and
priorities must be established.

CORPORATE STRATEGY

BUSINESS STRATEGY

FUNCTIONAL STRATEGY

1
 8/24/2018

 Forward integration
› involves gaining ownership or increased
control over distributors or retailers
 Backward integration
› strategy of seeking ownership or increased
control of a firm’s suppliers
 Horizontal integration
› a strategy of seeking ownership of or
increased control over a firm’s competitors

 Market penetration strategy  Related Diversification

› seeks to increase market share for present › Value chains possess competitively
products or services in present markets valuable cross-business strategic fits.
through greater marketing efforts
 Unrelated Diversification
 Market development
› involves introducing present products or › Value chain are so dissimilar that no
services into new geographic areas competitively valuable cross-business
relationship exist
 Product development strategy
› seeks increased sales by improving or
modifying present products or services

 Retrenchment
› occurs when an organization regroups through
cost and asset reduction to reverse declining
sales and profits
 Divestiture
› Selling a division or part of an organization
› often used to raise capital for further strategic
acquisitions or investments
 Liquidation
› selling all of a company’s assets, in parts, for their
tangible worth

2
 8/24/2018

emphasizes producing standardized products strategy aimed at producing products and

at a very low per-unit cost for consumers who services considered unique industry-wide and
are price-sensitive directed at consumers who are relatively
 Type 1 price-insensitive
› low-cost strategy that offers products or
services to a wide range of customers at the
lowest price available on the market
 Type 2
› best-value strategy that offers products or
services to a wide range of customers at the
best price-value available on the market

 Type 4
› low-cost focus strategy that offers products  Cooperation Among Competitors
or services to a niche group of customers at
the lowest price available on the market  Joint Venture/Partnering
 Type 5  Merger/Acquisition
› best-value focus strategy that offers
products or services to a small range of
 Private-Equity Acquisitions
customers at the best price-value available  First Mover Advantages
on the market
 Outsourcing/Reshoring

3
 8/24/2018

 Product development  Production function

› engineering and scientific research activities › responsible for the creation, assembly or
involved in innovating new or improved provision of a good or service, for
products that add value to a product transforming inputs into outputs

 Materials management function  Sales function

› controls the movement of physical materials › plays a crucial role in locating customers
from the procurement of inputs through and then informing and persuading them to
production and into distribution and delivery buy the company’s products
to the customer

 Customer service function

› provides after sales service and support
› Can create a perception of superior value
by solving customer problems and
supporting customers