MGB 4013 - Week Five

This chapter is about The Five Generic Competitive Strategies: Which One To Employ?

A low-cost provider's basis for competitive advantage is lower overall costs than competitors. Successful low-cost leaders, who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable while a cost driver is a factor that has a strong influence on a firm's costs. It was said that 'a low-cost advantage over rivals can translate into better profitability than rivals attain'.

Differentiation enhances profitability whenever a company's product can command a sufficiently higher price or produce greater unit sales to more than cover the added costs of achieving the differentiation. Broad differentiation strategy is to offer unique product to wider range of buyers and consumers that satisfy with the fee and products. 

When a focused low-cost or focused differentiation strategy is attractive, the target market niche is a big enough to be profitable and offers good growth potential so industrial leaders choose not to compete in the niche - focuses avoid competing against strong competitors. Its basically difficult to multi-segment competitors to meet the specialized needs of niche buyers.

Best-cost provider strategies are a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality of service that happen while competing the rivals on price list. A company's competitive strategy should be well-matched to its internal situation and predicted on leveraging its collection of competitively valuable resources and capabilities.

MGB 4013 - Week Four

Hello friends! In week four we've learnt a topic about EVALUATING A COMPANY"S RESOURCES, CAPABILITIES, AND COMPETITIVENESS.

Basically, we discussed six questions throughout the topic. Let's discuss the questions. :)


1. How well is the firm's present strategy working?

##  The best indicators of a well-conceived, well-executed strategy is when the firm is achieving its stated financial and strategic objectives and it is an above-average industry performer.

Identifying the Components of a Single-Business Company's Strategy

As stated in the Strategic Management Principle, sluggish financial performance and second-rate market accomplishments almost always signal weak strategy, weak execution, or both.

2. What are the firm's competitively important resources and capabilities?

##  According to strategic management core concepts, a resource is a competitive asset that is owned or controlled by a firm while a capability or competence is the capacity of a firm to perform and internal activity competently through deployment of a firm's resources where a firm's resources and capabilities represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace. Next, a resource bundle is a linked and closely integrated set of competitive assets centered around one or more cross-functional capabilities. The VRIN tests for sustainable competitive advantage ask if a resource is Valuable, Rare, Inimitable, and Non-substitutable. Social complexity (company culture, interpersonal relationships among managers or R&D teams, trust-based relations with customers or suppliers) and casual are two factors that inhibit the ability of rivals to imitate a firm's most valuable resources and capabilities. Plus, a dynamic capability is the ongoing capacity of a firm to modify its existing resources and capabilities or create new ones by (improving existing resources and capabilities incrementally and adding new resources and capabilities to the firm's competitive asset portfolio).

3. Is the company able to seize market opportunities and nullify external threats?

## SWOT analysis is a simple but powerful tool for sizing up a company's strengths and weaknesses, its market opportunities, and the external threats to its future well-being. 

4. Are the company's cost structure and customer value proposition competitive?

## The higher a company's costs are above those of close rivals, the more competitively vulnerable it becomes. However, the greater the amount of customer value that a company can offer profitably relative to close rivals, the less competitively vulnerable it becomes. As we've cover in this topic, a company's cost competitiveness depends not only on the costs of internally performed activities (its own value chain) but also on costs in the value chains of its suppliers and distribution channel allies. Bench-marking the costs of company activities against rivals provides hard evidence of whether a company is cost-competitive while performing value chain activities with capabilities that permit the company to either outmatch rivals on differentiation or beat them on costs will give the company a competitive advantage.

  

5. Is the firm competitively stronger or weaker than key rivals?

## High-weighted competitive strength ratings signal a strong competitive position and possession of competitive advantage; low ratings signal a weak position and competitive disadvantage. A company's competitive strength scores pinpoint its strengths and weaknesses against rivals and point directly to the kinds of offensive/defensive strengths and reduce its competitive vulnerabilities. Thus, a good strategy must contain ways to deal with all the strategic issues and obstacles that stand in the way of the company's financial and competitive success in the years ahead.

6. What strategic issues and problems merit-front-burner managerial attention?

## It is stated that zeroing in on the strategic issues a company faces and compiling a list of problems and roadblocks creates a strategic agenda of problems that merit prompt managerial attention. 

u Strategic “How To” Issues:

●How to meet challenges of new foreign competitors.

●How to combat the price discounting of rivals.

●How to both reduce high costs and prepare for price reductions.

●How to sustain growth as buyer demand slows.

●How to adapt to the changing demographics of the firm’s customer base.

u Strategic “Should We” Issues:

●Expand rapidly or cautiously into foreign markets.

●Re-position the firm to move to a different strategic group.

●Counter increasing buyer interest in substitute products.

●Expand of the firm’s product line.

●Correct the firm’s competitive deficiencies by acquiring a rival firm with the missing strengths.