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Firstly, I learn about two key factors that make the
strategy different from another. (1) Market target broad or narrow? (2)
Competitive advantage pursued linked to low costs or product differentiation?
THE FIVE GENERIC
COMPETITIVE STRATEGIES
Low costs provider strategy: (attract a broad spectrum of
buyers) achieve lower overall costs than rivals on comparable product.
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Focused low costs strategy: (narrow buyer segment) and
outcompeting rivals on costs.
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Broad differentiation strategy: (attract a broad spectrum of
buyers) differentiate the company’s product offering than rivals’.
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Focused differentiation strategy: (narrow buyer segment) and
outcompeting rivals with a product offering.
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Best costs provider strategy :
giving customer more value for their money by satisfying buyers’ expectations
(quality, features, performance, service)
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Cost drivers: key to driving down company costs.
1.
Learning and experience. Ex: employ skill worker
to produce more product.
2.
Input costs. Ex: use cheaper raw material.
3.
Production technology design. Ex: using new
technology to increase production.
4.
Supply chain efficiencies. Ex: when we have good
supply it is important to create good relationship with them.
5.
Incentive system and culture. Ex: give incentive
to the employee or workforce to sustain them on the organization.
Uniqueness drivers: key to creating a differentiation advantages.
1.
Product features and performance.
2.
Customer services.
3.
Production R & D.
4.
Technology and innovation.
5.
Employee skill, training and experience.
6.
Sales and marketing.
7.
Quality control processes.
8.
Input quality.
In addition, there are two main risks of a focused low cost
or focused differentiation strategy. First, the chance that competitor will
find another way to create a similar products or services or prices in serving
the narrow buyer segment. Second, the potential of the preferences and needs of
narrow buyer segment to shift toward the product desired by the majority of
buyers.
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