Kế hoạch kinh doanh - Strategy and competitive advantage

The Five Generic Competitive StrategiesScreen graphics created by:Jana F. Kuzmicki, Ph.D.Troy University-Florida Region Strategy and Competitive AdvantageCompetitive advantage exists when a firm’s strategy gives it an edge inAttracting customers andDefending against competitive forcesConvince customers firm’s product / service offers superior valueA good product at a low priceA superior product worth paying more forA best-value productKey to Gaining a Competitive AdvantageFig. 5.1: The Five Generic Competitive StrategiesLow-Cost Provider StrategiesMake achievement of meaningful lower coststhan rivals the theme of firm’s strategyInclude features and services in productoffering that buyers consider essentialFind approaches to achieve a cost advantagein ways difficult for rivals to copy or matchKeys to SuccessLow-cost leadership means low overall costs, not just low manufacturing or production costs!Approaches to Securing a Cost AdvantageDo a better job than rivals ofperforming value chain activitiesefficiently and cost effectivelyRevamp value chain to bypasscost-producing activities that add littlevalue from the buyer’s perspective Approach 1Approach 2Control costs!By-pass costs!Keys to Success in AchievingLow-Cost LeadershipScrutinize each cost-creating activity, identifying cost driversUse knowledge about cost drivers to managecosts of each activity down year after yearFind ways to restructure value chain to eliminatenonessential work steps and low-value activitiesWork diligently to create cost-conscious corporate culturesFeature broad employee participation in continuous cost-improvement efforts and limited perks for executivesStrive to operate with exceptionally small corporate staffs Aggressively pursue investments in resources and capabilities that promise to drive costs out of the businessCost conscious corporate cultureEmployee participation in cost-control effortsOngoing efforts to benchmark costsIntensive scrutiny of budget requestsPrograms promoting continuous cost improvementSuccessful low-cost producers championfrugality but wisely and aggressivelyinvest in cost-saving improvements !Characteristics of a Low-Cost ProviderPrice competition is vigorousProduct is standardized or readily availablefrom many suppliersThere are few ways to achievedifferentiation that have value to buyersMost buyers use product in same waysBuyers incur low switching costs Buyers are large and havesignificant bargaining powerIndustry newcomers use introductory low prices to attract buyers and build customer baseWhen Does a Low-CostStrategy Work Best?Pitfalls of Low-Cost StrategiesBeing overly aggressive in cutting priceLow cost methods are easily imitated by rivalsBecoming too fixated on reducing costsand ignoringBuyer interest in additional featuresDeclining buyer sensitivity to priceChanges in how the product is usedTechnological breakthroughs open up cost reductions for rivalsIncorporate differentiating features that cause buyers to prefer firm’s product or service over brands of rivalsFind ways to differentiate that create value for buyers and are not easily matched or cheaply copied by rivalsNot spending more to achieve differentiationthan the price premium that can be chargedObjectiveKeys to SuccessDifferentiation StrategiesBenefits of Successful DifferentiationA product / service with unique, appealing attributes allows a firm toCommand a premium price and/orIncrease unit sales and/orBuild brand loyalty= Competitive AdvantageWhichhat is unique?Unique taste – Dr. PepperMultiple features – Microsoft Windows and OfficeWide selection and one-stop shopping – Home Depot, Amazon.comSuperior service -- FedEx, Ritz-CarltonSpare parts availability – CaterpillarEngineering design and performance – Mercedes, BMWPrestige – RolexProduct reliability – Johnson & JohnsonQuality manufacture – Karastan, Michelin, ToyotaTechnological leadership – 3M CorporationTop-of-line image – Ralph Lauren, Starbucks, ChanelTypes of Differentiation ThemesWhere to Find DifferentiationOpportunities in the Value ChainPurchasing and procurement activitiesProduct R&D and product design activitiesProduction process / technology-related activitiesManufacturing / production activitiesDistribution-related activitiesMarketing, sales, and customer service activitiesInternallyPerformedActivities, Costs, &MarginsActivities, Costs, &Margins ofSuppliersBuyer/UserValueChainsActivities, Costs,& Margins ofForward ChannelAllies &Strategic PartnersHow to Achieve aDifferentiation-Based Advantage Approach 1Incorporate features/attributes that raise theperformance a buyer gets out of the productApproach 2Incorporate features/attributes that enhance buyer satisfaction in non-economic or intangible waysApproach 3Compete on the basis of superior capabilitiesApproach 4Incorporate product features/attributes thatlower buyer’s overall costs of using productWhen Does a DifferentiationStrategy Work Best?There are many ways to differentiate a productthat have value and please customersBuyer needs and uses are diverseFew rivals are following a similardifferentiation approachTechnological change andproduct innovation are fast-pacedPitfalls of Differentiation StrategiesAppealing product features are easily copied by rivalsBuyers see little value in unique attributes of productOverspending on efforts to differentiate the product offering, thus eroding profitabilityOver-differentiating such that productfeatures exceed buyers’ needsCharging a price premiumbuyers perceive is too highNot striving to open up meaningful gaps in quality, service, or performance features vis-à-vis rivals’ productsBest-Cost Provider StrategiesCombine a strategic emphasis on low-cost with a strategic emphasis on differentiationMake an upscale product at a lower costGive customers more value for the moneyDeliver superior value by meeting or exceeding buyer expectations on product attributes and beating their price expectationsBe the low-cost provider of a product with good-to-excellent product attributes, then use cost advantage to underprice comparable brandsObjectivesWhen Does a Best-CostProvider Strategy Work Best?Where buyer diversity makesproduct differentiation the norm andWhere many buyers are alsosensitive to price and valueRisk of a Best-Cost Provider StrategyA best-cost provider may get squeezed between strategies of firms using low-cost and differentiation strategiesLow-cost leaders may be able to siphoncustomers away with a lower priceHigh-end differentiators may be able tosteal customers away with better product attributesFocus / Niche StrategiesInvolve concentrated attention on a narrow piece of the total market Serve niche buyers better than rivalsChoose a market niche where buyershave distinctive preferences, specialrequirements, or unique needsDevelop unique capabilities to serveneeds of target buyer segmentObjectiveKeys to SuccessGeographic uniquenessSpecialized requirements inusing product/serviceSpecial product attributesappealing only to niche buyersApproaches to Defining a Market NicheWhat Makes a NicheAttractive for Focusing?Big enough to be profitable and offers good growth potentialNot crucial to success of industry leadersCostly or difficult for multi-segment competitorsto meet specialized needs of niche membersFocuser has resources and capabilitiesto effectively serve an attractive nicheFew other rivals are specializing in same nicheFocuser can defend against challengers via superior ability to serve niche membersRisks of a Focus StrategyCompetitors find effective ways to matcha focuser’s capabilities in serving nicheNiche buyers’ preferences shift towards product attributes desired by majority of buyers – nichebecomes part of overall marketSegment becomes so attractive it becomes crowded with rivals, causing segment profits to be splinteredDeciding Which GenericCompetitive Strategy to UseEach positions a company differently in its market and competitive environmentEach establishes a central theme for how a company will endeavor to outcompete rivalsEach creates some boundaries for maneuvering as market circumstances unfoldEach points to different ways of experimenting with the basics of the strategyEach entails differences in product line, production emphasis, marketing emphasis, and means to sustain the strategyThe big risk – Selecting a “stuck in the middle” strategy! This rarely produces a sustainable competitiveadvantage or a distinctive competitive position!