Course name: Strategic Management

Course ID: MBA550

Submitted to: Professor Motaher Hossain

Submitted by: Irine Afroza Aurpa

ID: 2211771
Business Strategy

For businesses to maintain a sustainable competitive advantage, strategic analysis should be done
which helps business managers to choose a business strategy. Let’s begin with competitive
advantage; so, what is competitive advantage? It is a condition or circumstance that puts a
company in a favorable or superior business position. The two most prominent sources of
competitive advantage are cost structure and ability to differentiate. Cost structure is the
aggregate of the various types of costs, fixed and variable, that make up a business' overall
expenses. On the other hand, Differentiation is the means of teaching one concept and meeting
the different learning needs within a group.
Here, we will address two issues; strategies are most important in building competitive
advantage for single business units and if dominant product businesses diversify.

Evaluating Cost Leadership Opportunities:

Cost leadership is a term used when a company projects itself as the cheapest manufacturer or
provider of a particular product or commodity in a competition.
Low-cost advantages reduce the buyers pricing pressure, push rivals into other areas, also lessen
substitute’s attractiveness and any new entrants competing on price will face an entrenched cost
leader.
Many companies employing the cost leadership strategy might find the cost related to the
research and development team undesirable. This results in a reduction of funds which ultimately
results in the lack of innovative new products, leading the management to promote the same
products.
Using a cost leadership strategy can have several downsides. Consider the potential drawbacks to
cost leadership.

The cost leadership approach can be risky. Cost leaders continuously innovate new ways to
reduce costs and competitors are likely to copy the method.

It may be difficult to maintain quality. Cost leaders must find a way to maintain a positive image
and encourage brand loyalty and offer cheap goods and services.

Cost leaders are dependent on a high volume of sales.

Cost leaders may be slow to adapt to market changes. Cost leaders must adapt themselves with
advanced technologies to lower production costs.
Evaluating Differentiation
We have earlier seen the definition of differentiation and we know that it requires businesses to
have advantages which will give buyers uniquely valuable return.
Now, what are the differentiation opportunities for a firm?
Reduced price competition. Differentiation strategy allows a company to compete in the market
with something other than lower prices, Unique products, better profit margins, Consumer brand
loyalty, No perceived substitutes.

Evaluating Speed as a Competitive Advantage

Speed-based Strategies, or rapid responses to customer requests or market and technological
changes, have become a major source of competitive advantage for numerous firms in today's
intensely competitive global economy.
Rapid-response marketing gives brands the chance to apply the old saying, “strike while the iron
is hot”, and some of the brands that do have been able to take advantage of unexpected
opportunities to generate considerable earned media.
Speed can be created by how responsive a customer is, the product development cycle,
improvements made, how fast the delivery is and the information sharing technology, adjusting
the production process quickly, making decisions quickly.
A stable or mature industry might not provide much advantage to a firm introducing some forms
of rapid response. Rapid response should be done after training or reorganization and some firms
might lack training facilities. Firms that introduce rapid changes may not get the support or
advantage from the industry.

Evaluating Market Focus to Competitive Advantage

Market focus means understanding your customers. It means knowing your competitors and
anticipating their next strategy or tactic.
Market focus means knowing the overall dynamics and forces in the marketplace and
understanding how those forces might impact the business.
Some risks of focus strategies include imitation and changes in the target segments. Furthermore,
it may be easy for a broad-market cost leader to adapt its product to compete directly. Finally,
other focusers may be able to carve out sub-segments that they can serve even better.
Emerging Industries:
An emerging industry is a group of companies in a line of business formed around a new product
or idea that is in the early stages of development. An emerging industry typically consists of just
a few companies and is often centered around new technology.
A low-cost strategy to discourage potential competitors from entering the industry. A company
can even use price cuts to attract price-sensitive buyers. Differentiation strategies may be
adopted based on technological or product superiority. A company may adopt a cooperative
strategy (strategic alliance) by forming a partnership with key suppliers of materials and
components. An acquisition strategy or joint venture strategy can also be taken.
If the business strategy could shape its industry structure, improve the product qualities and
performance, develop good relationships with the suppliers and make the firm’s technology
dominant then the industry setting will be successful.

Growing Industries
A growth strategy is a plan that companies make to expand their business in a specific aspect,
such as yearly revenue, number of customers, or number of products. Specific growth strategies
can include adding new locations, investing in customer acquisition, or expanding a product line.
For success in this industry setting, they should have strong brand recognition, when consumers
are able to recognize the firm through visual or auditory cues alone, even without hearing the
company's name. When demand increases, they should have the ability to scale up their
resources and use them in the best possible manner. More research and development and the
ability to repeat buying where one customer buys again and again from them.
Strategies used by firms competing in markets where the growth rate of that market from year to
year has reached or is close to zero. Firms working with the nature industry strategies sell
increasingly to experienced, repeat buyers who are now making choices among known
alternatives.

Mature Industries:
A firm in a maturing industry may adopt any of the following strategic moves to strengthen its
competitive position. eliminating) unprofitable or very-less profitable product-items from the
product line. Pruning marginal products results in cost savings. In the industry-value-chain, the
major parties involved are suppliers, producers, and distributors, Tripartite collaboration among
these parties can produce excellent business results. A firm may pursue a strategy of reducing
costs in all activities of the firm. Driving down unit costs of products is an ‘absolute must’ in a
maturing industry.
Declining Industries:
A declining industry is an industry where growth is either negative or is not growing at the
broader rate of economic growth.
In a declining industry, several strategy options are available to the managers. A firm in a
declining industry may choose to employ a harvesting strategy to earn the maximum possible
amount of cash from the business. The firm may divest or sell off a portion of its assets like
equipment, land, stock of materials, etc.
The cash proceeds can be used for improving the core business. Or the firm may dispose of the
business entirely.

Fragmented Industries:
Fragmentation happens when there is no clear leader within an industry. This means while many
companies may operate in a specific industry, none of them have enough market share to
influence prices, production, investment, and competition. There are several ways that businesses
overcome the challenges of a fragmented market, including Reducing production costs,
Differentiating, and specializing by creating products and services that are unique or specialized
to a certain target audience. Facilitating local offerings for instance, a pet supply store that
typically sells products online can overcome the challenges of a broad target market by providing
special offerings to its local customers. And introducing vertical integration.

Global Industries:
A global strategy is a plan to help a company grow from an international business (which sells
products or services in other countries) to a global business that operates facilities like factories
and distribution centers around the world.

Four Generic Global Competitive Strategies

Four generic business-level strategies emerge from these decisions: (1) broad cost leadership, (2)
broad differentiation, (3) focused cost leadership, and (4) focused differentiation. In rare cases,
firms can offer both low prices and unique features that customers find desirable.
What is the Grand Strategy Matrix?
The Grand Strategy Matrix charts two dimensions – the market growth vs the organization’s
competitive position. Each of the four quadrants has several strategic options and the framework
is designed to assist you evaluate the potential direction you decide to move in as a business.
Grand strategy clusters are a model that focuses on each strategy as it would work within the
strategic plans of a company. These strategies are then clustered to shape the business direction
and focus on the long-term goals of the company.

The Grand Strategy Matrix visualizes the business life cycle within an industry. Company
competitiveness and market growth fluctuate over time, causing companies to reassess their
options regularly. The Grand Strategy Matrix also helps companies react realistically by
revealing that certain growth might not be possible for a company in a particular situation.

Suppose a company is looking to enact a particular strategic option but realizes that option is in
the complete opposite quadrant from theirs. In that case, it can save the company from a
decision that might make their situation worse.