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.