A10_Creating_competitive_advantage_1112.pptxVIP

Strategic Management Level 6 Creating competitive advantage: Generic competitive strategies and Interactive strategies A competitive strategy is the strategy a firm adopts in relation to the competition, this provides a basis on which competitive advantage may be achieved in its market Competitive Strategy Exhibit 6.1 Business-level strategies Cost Leadership Differentiation Focus either cost of differentiation Porter’s three generic strategies The organisation seeks a cost advantage over its competitors by achieving the lowest cost position in the industry. It requires efficiency and the possible use of scale economies, technology, cheap labour and/or cheap suppliers Cost Leadership Cost Leadership can be achieved by  Cost leadership: Limitations Involves the selection of one or more choice criteria that are used by many buyers in an industry, the firm then uniquely positions itself to meet these criteria. Differentiation Differentiation can be achieved by The approach is based on the principle that organisations achieve competitive advantage by providing their customers with what they want, or need, better or more effectively than competitors, and in ways which their competitors find difficult to imitate Differentiation: Limitations A firm aims to differentiate within one or a small number of target market segments. The special needs of a segment Focus Has 8 alternative strategies based on differentiation, focus and cost leadership strategies but also 3 failure strategies. Bowman’s Strategy Clock Exhibit 6.2 The strategy clock: competitive strategy options Note: The strategy clock is adapted from the work of Cliff Bowman (see D. Faulkner and C. Bowman, The Essence of Competitive Strategy, Prentice Hall, 1995). However, Bowman uses the dimension ‘Perceived Use Value’ Priced based strategies Differentiation strategies Hybrid strategies Focussed differentiation Failure strategies Exhibit 6.3 Sustaining competitive advantage The idea