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COMPETITIVE POSITION
Strategic Moves, Timing, and Scope
of Operations
CHAPTER 6
LEARNING OBJECTIVES
Learn whether and when to pursue offensive or defensive strategic
moves to improve a companys market position.
Recognize when being a first mover or a fast follower or a late
mover is most advantageous
Become aware of the strategic benefits and risks of expanding a
companys horizontal scope through mergers and acquisitions
Learn the advantages and disadvantages of extending the
companys scope of operations via vertical integration.
Become aware of the conditions that favor farming out certain
value chain activities to outside parties
Understand when and how strategic alliances can substitute for
horizontal mergers and acquisitions or vertical integration and how
they can facilitate outsourcing.
4.
competitive advantage by
Abandoning efforts to beat out
competitors in existing markets and
Inventing a new industry or distinctive
market segment to render existing
competitors largely irrelevant and
by competition
Industry offers wide-open
Blue-Ocean Strategy
An example of such wide-open or blue-ocean market space
is the online auction industry that eBay created and now
dominates
Other examples of companies that have achieved
competitive advantages by creating blue-ocean market
spaces include Starbucks in the coffee shop industry, Dollar
General in extreme discount retailing, FedEx in overnight
package delivery
Zipcar Inc. is presently using a blue-ocean strategy to
compete against entrenched rivals in the rental-car
industry. It rents cars by the hour or day (rather than by the
week) to members who pay a yearly fee for access to cars
parked in designated spaces located conveniently
throughout large cities
(a)
Forward integration can lower costs by increasing efficiency and bargaining power.
It can allow manufacturers to :
Gain better access to end users,
Strengthen brand awareness,
Increase product differentiation
In many industries, independent sales agents, wholesalers, and retailers handle
competing brands of the same product; having no allegiance to any one companys
brand, they tend to push whatever earns them the biggest profits
Some producers have opted to integrate forward by selling directly to customers at
the companys Web site
Bypassing regular wholesale/retail channels in favor of direct sales and Internet
retailing can have appeal if it:
Reinforces the brand and enhances consumer satisfaction
Lowers distribution costs, produces a relative cost advantage over certain rivals,
and results in lower selling prices to end users.
7.
OUTSOURCING STRATEGIES:
NARROWING
THE SCOPE OF OPERATIONS
OUTSOURCING STRATEGIES:
NARROWING
THE SCOPE OF OPERATIONS
OUTSOURCING STRATEGIES:
NARROWING
THE SCOPE OF OPERATIONS
4.
5.
6.
OUTSOURCING STRATEGIES:
NARROWING
THE SCOPE OF OPERATIONS