Strategy & Competitive Advantage The 5 Competitive Strategies Cooperative Strategies Offensive & Defensive Moves Matching Strategy to a Company Situation Strategies for classic types of Industry Environment Strategies for classic industry positions

Matching Strategy to Company Situation 6 Classic Types of Industry Environment Emerging High Velocity Maturing Stagnant / Declining Fragmented International

Strategy-making in Emerging Industries - Uncertainty - Mkg must drive trial - Proprietary technology - Delayed purchase issue - Low entry barriers - Operational issues - Strong experience curve effects 2 critical issues: Financing until sales take off Which mkt segments / competitive advantages to pursue

Strategy in Emerging Industries Low cost/DIFFERENTIATION Technology, quality & performance Adopt dominant technology early Key suppliers/distributors New customer groups/applications Use marketing appropriately Prepare for new entrants Balance race for share with building durable competitive advantage

Strategy in High Velocity markets FOCUS STRATEGY Expertise in R&D Agile response capability Strategic Alliances Balance between internal capabilities and external alliances to build c.ad.

Strategy in Maturing Industries Efficiency-increasing profit-preserving measures Pruning the product line Process innovation Cost reduction Increase sales to existing customers Take-over rivals Expand internationally Avoid the middle ground & over-capacity

Strategy in Stagnant / Declining Industries Options: Sell up and cash in Focus on growth segments within industry Differentiate based on quality/pdt innovation Cost reduction Caution! - Profitless war of attrition Diverting too much cash out too early Being overly optimistic about the future

Strategy in Fragmented Industries Usually focus strategies preferable Focus on formula facilities Become low cost operator Increase customer value through V.I. Specialise on one pdt / service category Specialise by customer type Focus on limited geographic area Many different strategic approaches followed

International Industries Why? - new markets - leverage capabilities - reduce costs - spread risk - access resources Issues - structural/demographic/cultural differences - cost/economic differences - government policies - scope of competition?

International Strategy 1. License/Franchise 2. Export - Income from royalties - Suit firm with valuable patent but limited resources - Domestic production - foreign distribution/mkg - Min. risk/capital; good control; scale economies

International Strategy 3. Multicountry Customise strategy to local conditions International strategy = sum of country strategies Little coordination across boundaries Difficult to build ww c.ad

International Strategy 4. Global Integrated & coordinated strategy worldwide Optimum location of activities - resources/cost/service Better coordination of activities - leverage brandname, R&D, advertising etc Strengthen resource base - ‘dominating depth’/ org. learning Outcompete domestic firms - profit sanctuaries/cross subsidisation

International Strategy Strategic Alliances Access Costs Share expertise/local knowledge/distribution Issues… Trust; coordination; over-dependence Use as transitional tool; protect core info.; Learn rapidly & transfer learning

Strategies for Industry Leaders Stay-on-the-offensive strategy Fortify-and-defend strategy Follow-the-leader strategy

Strategies for Runner-Up Firms Vacant-niche strategy Specialist strategy Ours-is-better-than-theirs strategy Content-follower strategy Growth-via-acquisition strategy Distinctive-image strategy

Strategies for Weak Businesses Offensive turnaround Fortify-and-defend Immediate abandonment Harvest

Commandments for Crafting Successful Strategy Think of the long term Consistency... Avoid ‘stuck in the middle’ strategies Invest in creating, building & defending a sustainable c.advan. Be prepared... Be flexible... Look for opportunities... Well thought out, integrated strategies