1. Selecting a Competitive Strategy
Competitive strategy deals exclusively with the specifics of management’s game plan for competing successfully:
Actions and approaches to please customers
Offensive and defensive moves to counter maneuvers of rivals
Responses to shifting market conditions
Initiatives to strengthen the firm’s market position and achieve a particular kind of competitive advantage.
Competitive Strategy is narrower in scope than Business Strategy (which deals with all aspects of a company’s strategy for achieving its performance targets in a particular business)

2. Three Dimensions on which Companies compete
Product Cost (often corresponds to pricing)
Low  High
Product Characteristics
Standard  Differentiated (unique in some aspect)
Targeted Customer Market Segment
Narrow  Broad
Leads to five modes of competitive advantage 

3. Five Modes of Competitive Advantage (Strategic Positioning)
Low cost provider of standard product in broad customer market.
Low cost provider of standard product in narrow (niche) customer market.
Differentiated product in broad customer market segment.
Differentiated product in narrow customer market segment.
Cost appropriate (value) to some degree of product uniqueness across customer market segments.
Can you give an example of each – not from the text?

5. Low Cost Positioning Make value chain activities more efficient
Apply economies of scale – operations, knowledge
Streamline/automate supply chain activities
Utilize outsourcing for less productive activities
Eliminate one or more value chain activities
Sell directly to customers
Have suppliers ship directly to store rather than warehouse
Replace human activities with technology
When is low cost advantage sustainable?

6. Examples of Cost Saving Actions
Have lower specifications for purchased materials, parts, and components than rivals
Strip frills / features from the product offering that are not highly valued by price-sensitive or bargain-hunting buyers
Offer a limited selection / few versions of a product line and being content to meet the needs of most buyers rather than all buyers
Distribute the firm’s product only through low-cost distribution channels
Use the most economical method for delivering customer orders (even if it results in longer delivery times)
Locate suppliers plants / warehouses close to a firm’s facilities to reduce materials handling and shipping costs
Locate firm’s production facilities close to customer markets to reduce shipping costs

7. Wal-Mart’s Approach to Managing Its Value Chain
Institute extensive information sharing with vendors via online systems
Pursue global procurement of some items and centralize most purchasing activities
Invest in state-of-the-art automation at the company’s distribution centers
Strive to optimize the product mix and achieve greater sales turnover
Install security systems and store operating procedures that lower shrinkage rates
Negotiate preferred real estate rental and leasing rates with owners of store sites
Manage and compensate the workforce in a manner that leads to lower labor costs
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8. Southwest Airlines Enhances Value Chain
Made turnarounds at boarding gates more efficient (25 minutes versus 45 minutes for rivals) allows:
Planes to fly more hours per day – increased capacity utilization
More flights scheduled per day with fewer aircraft – increased productivity
More revenue generated per plane than rivals – productivity advantage
Eliminated several services – cost savings
In-flight meals
Assigned seating
Baggage transfer to connecting airlines
Used technology to automate human activities with online reservation system
Reduces staffing requirements at reservation centers and airport counters
Are any of these competitive advantages sustainable?

9. Broad Differentiation Positioning
Offering unique product attributes that a wide range of buyers find appealing, valuable, and worth paying for
Is attractive when buyer needs and preferences are too diverse to be satisfied by a single, standardized product
Needs to be strongly differentiated from the offerings of rivals

10. What Are the Principal Uniqueness Drivers?
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11. Broad Differentiation Methods
Companies can pursue differentiation from many angles:
Unique taste – Dr. Pepper, Listerine
Multiple features – Microsoft Office, iPhone, iPod, iPad
Wide selection and one-stop shopping – Amazon.com
Superior service – FedEx
Engineering design and performance – Mercedes, BMW
Prestige and distinctiveness – Rolex
Product reliability – Johnson & Johnson
Quality manufacture – Michelin, Honda
Technological leadership – 3M Corporation
Full range of services – Charles Schwab
Wide selection/many varieties – Campbell’s soups
High-fashion design – Gucci and Chanel
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12. Value Chain Differentiation Opportunities
Incorporate valuable innovative features and performance attributes into the product that are not found in rivals’ products
Pursue continuous quality improvements in products / processes
Emphasize new product R&D and product innovation
Improve product selection
Invest in R&D for better production techniques
Improve customer service / providing more service options.
Emphasize HR management activities that improve the skills, expertise, and knowledge of personnel
Pursue sales/marketing/advertising activities to enhance brand
Improve distribution / delivery capabilities

13. Other Strategic Positions
Narrow/focused low cost
Ex: private labels
Narrow/focused differentiation
Ex: Alienware, Sig Zane, Mehana Brewing Co
Best Cost – preferred product with better value
Need to excel at both – distinction AND cost efficiencies
Ex: Target, Hawaiian Style Cafe

14. STIHL Inc. Company information Dealer network Product features
What is STIHL’s competitive strategy?
Is their market narrow or broad?