â€œCompetitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value .â€. Michael E. Porter.
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“Competitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value.”
Michael E. Porter
Corporate strategy is basically concerned with the choice of businesses, products and markets. It tries to answer certain key questions:
(i) What businesses the firm should be in, in terms of the range of products it supplies. Punjab Tractors is a specialized company. It is involved almost exclusively in the manufacture of tractors. Hindustan Lever Ltd. is highly diversified with interests in soaps, tea, washing powders, detergents, tooth pastes, shampoo, creams, salt, hair oils etc.
(ii) What should be the optional geographic spread of activities for the firm? In the restaurant business, most firms serve small local markets, whereas McDonald’s operates in more than one hundred countries throughout the world.
(iii) What range of vertically linked activities should the firm encompass? Reliance Industries is a key player in each of the products in the Petrochemical—Fibre intermediate chain (synthetic textiles, PSF, PFY, PTA MEG)
(iv) How the corporate office should manage its group of businesses? Corporate strategy spells out the businesses in which the firm will participate, the markets it will serve and the customer needs it will satisfy.
Robert Kaplan & David Norton –
Ability to Change
Key to Gaining a Competitive Advantage
Keys to Success
Low-cost leadership means low
overall costs, not just low
manufacturing or production costs!
Option 1: Use lower-cost edge to
Option 2: Maintain present price, be content with present market share, and use lower-cost edge to
Eliminate some production processes from value chain used by traditional integrated steel mills; cut investment in facilities and equipment
Strive hard for continuous improvement in the efficiency of its plants and frequently invest in state-of-the art equipment to reduce unit costs
Carefully select plan sites to minimize inbound and outbound shipping costs and to take advantage of low rates for electricity
Hire a nonunion workforce that uses team-based incentive compensation systems
Heavily emphasize consistent product quality and maintain rigorous quality systems
Minimize general and administrative expenses by maintaining a lean staff at corporate headquarters and allowing only 4 levels of managementNucor Corporation’sLow-Cost Provider Strategy
Successful low-cost producerschampion
frugalitybut wisely and aggressively
invest in cost-saving improvements !
Keys to Success
& Margins of
Strategic PartnersWhere to Find Differentiation Opportunities in the Value Chain
Incorporate product features/attributes thatlower buyer’s overall costs of using product
Incorporate features/attributes that raise theperformance a buyer gets out of the product
Incorporate features/attributes that enhance buyer satisfaction in non-economic or intangible ways
Compete on the basis of superior capabilities
Serve niche buyers better than rivals
Keys to Success
The big risk – Selecting a “stuck in the middle” strategy! This rarely produces a sustainable competitiveadvantage or a distinctive competitive position.
Since marketing has become crucial, the
The company is outsourcing its colour television
company focuses on it, buying all its bottling,
assembling processes from Salora, preferring to
packaging, and stamping since these are
direct its resources to leveraging the equity of its
commoditised aspects where it can expect to
famous brand and on breaking into a crowded
d little value itself.
Jenson & Nicholson
Entering a crowded market,
With global markets for
Intent on catching up with
it will focus on its core
yarns still expanding, the
the leaders, the company
function of assembly,
company had opted to focus
has invested in marketing
up costs as
on its core strength instead
and distribution. Unable to
low as possible, and is
of integrating. Since
integrate backwards, there
outsourcing 40 per cent of
production is crucial, it
fore, it has to outsource all
its components, its
its chemicals and raw
well as its
distribution, and ware