Transcript Competitive Strategies - Texas Tech University

Ch 6: Competitive Strategies
Group Six:
Knowl Richardson
Landon Cotham
Dustin Eggleston
Maddie Ramsey
Amber Morris
Katy Martin
Competition is Present in All Organizations.
Competitive Advantage- Qualities that Set an
Organization Apart.
 Distinctive Capability- When an Organization Does
Something that Others Can’t, or Does it Better than
Others Do.
 Unique Resource- An Organization Has Something
that Other Competitors Don’t.



Exploit Competitive Advantages and Current
Resources.

Competition- Organizations Battle or Vie for Some
Desired Object or Outcome. (Customers, Market
Share)

Industry Perspective-Focuses on Competitors as
Organizations that are Making/Selling the Same or
Very Similar Products/Services.

Market Perspective- Views Competitors as
Organizations that Satisfy the Same Customer
Need.

Strategic Groups Perspective- Competitors are
Groups of Firms Competing in an Industry with
Similar Strategies, Resources, and Customers.
 This defines WHO competitors are because the most
relevant competitors are in your strategic group.

Based On Strategies that Organizations Use to
Adapt to their Uncertain Competitive Environments.

Four Strategic Postures: Prospector, Defender,
Analyzer, and Reactor.
Organization Innovates by Finding and Exploiting
New Product/Market Opportunities.
 Analyze the Changing Environment to See Future
Profit-bearing Actions Now.
 Competitors Don’t Know What They’re Going to do
Next (MTV).


Used to Protect Current Market Share by
Emphasizing Existing Products and Producing a
Limited Product Line.
 GM reducing lines of vehicles and models offered to lower
cost and retain damaged market share.
Do Whatever it Takes to Prevent Competitors from
Invading the Market.
 Only works if The Product(s) Remain Competitive
with Competitors’.


Watch For and Copy Successful Ideas of Prospectors
and Their Pioneers.

Thoroughly Analyze Business Ideas Before Trying
Them.
Lack of a Coherent Strategy or Apparent Means of
Competing.
 React to Environmental Change Only when Forced
by Environmental Pressures.
 Fail to React Quickly Because They Don’t Have the
Necessary Resources
 NOT Recommended, Seen as a “Default” Strategy.
Without Change, Reactor will Always be in a Weak
Competitive Position

Appropriate Competitive Strategy Needed Along
with Five Forces Model and Value Chain.
 Strategy Based on Competitive Advantage From
Only Two Sources:

 Having lowest costs in the industry.
 Having significant and desirable differences from
competitors.

Generic Competitive Strategies can be Made from
Cost Leadership, Differentiation, and Focus.

Why “Generic”?
 These strategies can be pursued by any type/size
organization in any type/size industry.
Organization Strives to Have the Lowest Costs in its
Industry and Produce Products for Broad Customer
Base.
 Not Necessarily Lowest Prices, but With Lowest
Costs, can Potentially Charge Lowest Prices and Still
Earn Profits.
 Allows a Better Position if a Price War Starts.


Be Efficient in All Areas.

Narrow Product Lines Aimed at Average Customer.

Have Plain/Effective Establishments.
Competitors Could Find Better Cost Cutting
Strategy, Taking Away Advantage.
 Competitor Might Imitate Cost Leader’s Actions and
Erode Advantage.
 Cost Leader Might Lose Sight of Changing
Customers’ Wants.

 It doesn’t matter how efficiently you make
products/services if no one wants them.





Provide Unique Products with Features that
Customers Value and See as Different, so they Pay a
Premium for it.
Compete by Offering Truly Unique Products in Eyes
of Customers.
All Resources Concentrate on Isolating and Knowing
Specific Market Segments.
Use Multiple Methods to Differentiate Themselves.
Offer Wide Product Lines.
Differentiate Along Many Different Dimensions to
Reach All Niches of Market.
 Work to Establish Brand Loyalty

 Brand Loyalty- When customers consistently and
repeatedly seek out, purchase, and use a particular brand.

Unique Resources and Capabilities Tend to be in
Marketing and Research & Development





Can be Costly, Must Manage Costs, but Not Too
Much so You Retain Differentiation.
Competitors’ Imitation Products/Services may
Affect Uniqueness.
Customers Could Become More Price Sensitive.
Product Differences May Lose Their Importance.
Organization Might Find that Advantage Based on
Being Different and Unique no Longer Work.
Organization Pursues a Cost or Differentiation
Advantage but Within a Narrow Customer
Group/Segment.
 Focus on a Specific Market Niche.
 Three Broad Ways to Segment Specialized Market
Niches:

 Geographical
 Type of Customer
 Product Line Segment

Geographical Niche- Region or Locality
 Midwest Airlines

Customer Niche- Focuses on Specific Group of
Customers’ Unique Needs
 Christine Columbus- Female Travelers

Product Line Niche- Focus on Specific & Specialized
Product Line

Focuser Knows the Market Niche Well
 Stay close to customers and respond quickly to changes.

Develop Strong Brand Loyalty

Can Have Niche to Themselves if Competitors Don’t
Offer Similar Products/Services

Focuser Often Operates on a Small Scale
 Hard to lower costs significantly

Niche Customers may Change Taste or Needs
 Difficult for focuser to change niches

Focuser is Subject to Being “outfocused” by
competition




Organization hasn’t developed a low cost or a
differentiation competitive advantage
Costs too high to compete with low cost
leader
Products and services aren’t differentiated
enough to compete with differentiator
Getting Unstuck: Choosing the right
competitive advantage to pursue
Provide expanded and more realistic description of
competitive strategies
 Integrated Low Cost-Differentiation Strategy

 Simultaneously achieving low costs and high levels of
differentiation
 Information Systems have opened the door for competing
on the basis of having low costs and being unique

Mintzberg’s Generic Competitive Strategies
 Six possible competitive strategies
▪ Differentiation: Price, marketing image, Product design, product
quality, product support
▪ Undifferentiated

The Role of Functional Strategies
 determine competitive strategy through
resources and capabilities
 Determines how competitive strategy is
implemented
 A competitive advantage will not be possible
without a functional strategy



Organization will be competing against other
organizations through offensive and
defensive moves
Offensive moves: organization's attempts to
exploit and strengthen its position through
attacks on competitor’s position
Defensive moves: organization’s attempts to
protect its competitive advantage and
market share


Strategies must be monitored and evaluated
for performance effectiveness and efficiency
Determine what happened and why
 Pinpoint area of competitive weakness

If desired levels of performance haven’t been
reached, changes may be necessary



Competitive Strategies
Miles and Snow’s Adaptive Strategies
 Prospector
 Defender
 Analyzer
 Reactor
Porter’s Generic Competitive Strategies
 Cost Leadership
 Differentiation Strategy
 Focus Strategy


Contemporary Views on Competitive Strategy
 Integrated Low-cost Differentiation Strategy
 Mintzberg’s Generic Competitive Strategy
Competitive Actions
 Offensive Moves
 Defensive Moves