Competitive Strategies

In this course, you will understand what distinguishes each of the five generic strategies and why some of these strategies work better in certain kinds of industry and competitive conditions than in others. A competitive strategy concerns the specifics of management’s game plan for competing successfully and securing a competitive advantage over rivals in the marketplace.

It is important to understand what distinguishes each of the five generic strategies and why some of these strategies work better in certain kinds of industry and competitive conditions than in others. A low-cost leader’s basis for competitive advantage is lower overall costs than competitors’. Success in achieving a low-cost edge over rivals comes from eliminating and/or curbing “nonessential” activities and-or out managing rivals in performing essential activities. A low-cost provider strategy achieves lower overall costs than rivals and appealing to a broad spectrum of customers, usually by underpricing rivals.

The essence of a broad differentiation strategy is to offer unique product or service attributes that a wide range of buyers find appealing and worth paying for. A low-cost provider strategy can always defeat a differentiation strategy when buyers are satisfied with a basic product and don’t think “extra” attributes are worth a higher price.

The targeted segment, or niche, can be defined by geographic uniqueness or by special product attributes that appeal only to niche members. Niche strategies are focused closely on serving segment-specific or niche markets. Business strategy may alternatively be based on the process of product or service differentiation across a range of markets and market segments.

Best-cost provider strategies are a hybrid of low-cost provider and differentiation strategies that aim at satisfying buyer expectations on key quality/features/performance/ service attributes and beating customer expectations on price. A company’s competitive strategy should be well matched to its internal situation and predicated on leveraging its collection of competitively valuable resources and competencies.