CHAPTER 5: THE FIVE GENERIC COMPETITIVE STRATEGIES

A company’s competitive strategy deals with __________________.

• management’s game plan for competing successfully—the specific efforts to please customers, offensive and defensive moves to counter the maneuvers of rivals, the responses to current market conditions, and the initiatives undertaken to improve the company’s market position.

• what its strategy will be in such functional areas as R&D, production, sales and marketing, distribution, finance and accounting, and so on.

• its efforts to change its position on the industry’s strategic group map.

• its plans for entering into strategic alliances, utilizing mergers or acquisitions to strengthen its market position, outsourcing some in-house activities to outside specialists, and integrating forward or backward.

• its plans for overcoming the fi ve competitive forces.

The objective of competitive strategy is to ____________.

• contend successfully with the industry’s 5 competitive forces.

• knock the socks off rival companies by doing a better job of satisfying buyer needs and preferences.

• get the company into the best strategic group and then dominate it.

• establish a competitively powerful value chain.

• grow revenues at a faster annual rate than rivals are able to grow their revenues.

What are the five generic competitive strategies? Briefly describe one of the factors and identify the type of competitive advantage that each strategy is aimed at achieving.

Low-cost provider strategies means _________.

A company achieves competitive advantage whenever _____

• it is the acknowledged market share leader

• it is the industry’s acknowledged technology leader.

• it has greater fi nancial resources than its rivals.

• it has a well-known and well-regarded brand name, prefers offensive strategies to defensive strategies, and has a strong balance sheet.

• it has some type of edge over rivals in attracting customers and coping with competitive forces.

Which of the following is not one of the five generic types of competitive strategy?

• A low-cost provider strategy

• A broad differentiation strategy

• A best-cost provider strategy

• A focused low-cost provider strategy

• A market share dominator strategy

Which of the following is not an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively?

• Striving to capture all available economies of scale and learning/experience curve effects

• Trying to operate facilities at full capacity

• Adopting labor-saving operating methods

• Improving supply chain efficiency

• Redesigning products to eliminate features that might have market appeal, but excessively increase production costs

The objective of a best-cost provider strategy is to ____________

• deliver superior value to buyers by satisfying their expectations on key quality/performance/features/ service attributes and beating their expectations on price (given what rivals are charging for much the same attributes).

• offer buyers the industry’s best-performing product at the best cost and best (lowest) price in the industry.

• attract buyers on the basis of having the industry’s overall best-performing product at a price that is slightly below the industry-average price.

• outcompete rivals using low-cost provider strategies.

• translate its best-cost status into achieving the highest profit margins of any fi rm in the industry.

Focused low-cost strategy are:

Four (4) ways to offer customers something that rivals cannot (at least in terms of level of satisfaction):