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Five Generic Competitive Strategies

In: Business and Management

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CHAPTER 5

THE FIVE GENERIC COMPETITIVE STRATEGIES -

Which One to Employ?

Copyright ®2012 The McGraw-Hill Companies, Inc.

McGraw-Hill/Irwin

1. 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. 2. Gain command of the major avenues for achieving a competitive advantage based on lower costs. 3. Learn the major avenues to a competitive advantage based on differentiating a company’s product or service offering from the offerings of rivals. 4. Recognize the attributes of a best-cost provider strategy and the way in which some firms use a hybrid strategy to go about building a competitive advantage and delivering superior value to customers.

5–2

Why Do Strategies Differ?

Is the firm’s market target broad or narrow?

Key factors that distinguish one strategy from another
Is the competitive advantage pursued linked to low costs or product differentiation?

5–3

THE FIVE GENERIC COMPETITIVE STRATEGIES
Low-Cost Provider
Broad Differentiation Focused Low-Cost Focused Differentiation Best-Cost Provider
Striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers.
Differentiating the firm’s product offering from rivals’ with attributes that appeal to a broad spectrum of buyers. Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product. Concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals
5–4

5.1

The Five Generic Competitive Strategies: Each Stakes Out a Different Market Position

5–5

LOW-COST PROVIDER STRATEGIES
♦ Effective Low-Cost Approaches:


Pursue cost-savings that are difficult imitate. ●...

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