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Level
Strategy:
Creating and
Sustaining
Competitive
Advantages
chapter 5
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Education
Learning Objectives
5-2
Learning Objectives
5-3
Learning Objectives
5-4
5-5
Sustaining a Competitive
Advantage
Consider
The viability of a firms success is driven
by both the internal operations of the firm
and the desires and preferences of the
market. Firms that succeed have the
appropriate resources and cost structure to
meet the needs of the environment.
They also have a strategy
Sustaining a Competitive
Advantage
5-6
Differentiation implies:
5-10
McDonalds
Wal-Mart
Apple
Target
Ikea
Costco
Overall Low-Cost
Leadership
5-12
Overall Low-Cost
Leadership
5-13
Improving Competitive
Position vis--vis the Five
Forces
5-14
An overall low-cost
Provides substantial
Protectsposition
a firm against
rivalry from competitors
Protects the firm
against powerful buyers
Provides more flexibility
to cope with demands
from powerful suppliers
who want to increase
input costs
Differentiation
5-16
Differentiation
5-17
Differentiation requires:
Improving Competitive
Position vis--vis the Five
Forces
5-18
An overall differentiation
strategy
Creates higher
entry barriers due
to customer loyalty
Provides higher
margins that enable
the firm to deal with
supplier power
Reduces buyer
power because
buyers lack suitable
alternatives
Establishes
customer loyalty and
hence less threat
from substitutes
Pitfalls of Differentiation
5-19
Focus
5-20
Focus
5-21
Cost focus
Creates
Differentiation focus
Differentiates
Improving Competitive
Position vis--vis the Five
Forces
5-22
An overall focus
strategy
Creates higher
entry barriers due
to cost leadership
or differentiation or
both
Can provide higher
margins that enable
the firm to deal with
supplier power
Reduces buyer
power because the
firm provides
specialized products
or services
Focused niches are
less vulnerable to
substitutes
Pitfalls of Focus
5-23
Combination Strategies:
Integrating Low-Cost &
Differentiation
5-24
Combination Strategies
5-25
Improving Competitive
Position vis--vis the Five
Forces
5-26
Creates higher
entry barriers due
to both cost
leadership &
differentiation
Can provide higher
margins that enable
the firm to deal with
supplier power
Reduces buyer
power because of
fewer competitors
An overall value
proposition reduces
threat from
substitutes
Pitfalls of Combination
Strategies
5-27
Question?
5-28
B.
C.
D.
Internet-Enabled Low-Cost
Leader Strategies
5-29
Disintermediation or removing
intermediaries also lowers transaction
costs
Internet-Enabled
Differentiation Strategies
5-30
Internet-Enabled Focus
Strategies
5-31
Internet-Enabled
Combination Strategies
5-32
Introduction
Growth
Maturity
Decline
Strategies in the
Introduction Stage
5-35
Strategies:
5-36
Strategies:
5-37
Strategies:
5-38
Strategies:
Question?
5-39
As markets mature,
A.
B.
C.
D.
Turnaround Strategies
5-40