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Figure 5.1: The Five Generic Competitive Strategies

Figure 5.1: The Five Generic Competitive Strategies. Low-Cost Provider Strategy. Provide goods or services with features acceptable to customers at lowest price Appeal to broad spectrum of buyers Produce good basic product with few frills Must have lowest overall costs

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Figure 5.1: The Five Generic Competitive Strategies

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  1. Figure 5.1: The Five GenericCompetitive Strategies

  2. Low-Cost Provider Strategy • Provide goods or services with features acceptable to customers at lowest price • Appeal to broad spectrum of buyers • Produce good basic product with few frills • Must have lowest overall costs • Must achieve competitive advantage based on costs

  3. Low-Cost Provider Strategy • 2 major avenues for achieving a cost advantage • Cost-efficient management of value-chain • Revamping value-chain • Keys to success • Works best when? • Pitfalls/Risks

  4. Differentiation • Provide products that customers perceive as being unique in ways that are important to them • Appeal to a broad spectrum of buyers • Uniqueness must be valuable to buyers and hard to imitate • Price premium charged must be greater than cost to differentiate • Many approaches to differentiation

  5. Differentiation • Types of differentiation • Differentiation and the value-chain • Best approaches to differentiation • Works best when • Pitfalls/Risks

  6. Best-Cost Provider Strategy • Mix of low cost and differentiation • Give buyers more value for the money • Meet expectations of product attributes and beat expectations of price • Must offer significantly more value for the money • Works best when? • Pitfalls/Risks

  7. Focus • Concentrate attention on a narrow piece of the total market • Try to do a better job of serving buyers in the target market niche than rivals • 2 approaches • Focus low-cost • Focus differentiation • Attractiveness • Risks

  8. A Company’s Menu of Strategy Options

  9. Supplementing Competitive Strategy • Strategic Alliances and Partnerships • Mergers and Acquisitions • Vertical Integration • Outsourcing • First-Mover Advantages and Disadvantages • Offensive and Defensive Strategies • Web Site Strategies • Functional-Area Strategies

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