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Introduction To Strategy

The document discusses strategy and competitive strategy. It defines competitive strategy as a long-term plan to gain advantage over competitors. There are four main types of competitive strategy: cost leadership, differentiation leadership, cost focus, and differentiation focus. Cost leadership involves low costs from scale while differentiation leadership involves unique product features. Cost focus targets low prices in specific segments and differentiation focus differentiates in niche segments. Examples discussed include Micromax's cost leadership, BMW's differentiation, Sonata's cost focus, and Titan's differentiation focus.

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sumera dervish
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109 views

Introduction To Strategy

The document discusses strategy and competitive strategy. It defines competitive strategy as a long-term plan to gain advantage over competitors. There are four main types of competitive strategy: cost leadership, differentiation leadership, cost focus, and differentiation focus. Cost leadership involves low costs from scale while differentiation leadership involves unique product features. Cost focus targets low prices in specific segments and differentiation focus differentiates in niche segments. Examples discussed include Micromax's cost leadership, BMW's differentiation, Sonata's cost focus, and Titan's differentiation focus.

Uploaded by

sumera dervish
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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"Introduction to Strategy" provides a comprehensive overview of the strategy discipline and

introduces the building blocks of strategy by providing overviews of fundamental conceptual


frameworks. We learn how firms decide where to compete by exploring the business
landscape and the structural forces that shape competition. It also let us present alternative
perspectives on strategy.
Strategy is about winning and about achieving superior performance relative to competitors
in creating and delivering a superior value offering. There is general agreement among
strategy scholars that strategic planning had little to do with strategy. The difficulties
experienced by managers in dealing with strategy relate to the sheer complexity, ambiguity,
and messiness of management practice in the competitive environments of organizations.
This requires a strategic thinking process that draws on a balanced combination of
systematic analysis and intuition leading to insights relevant to strategy making, hence the
centrality of the theme insight‐driven strategy.
The Reading includes 5 Interactive Illustrations: Porter's Forces Framework, Link between
Economic Profit of U.S. Industry Groups and Porter's Forces Framework, Types of
Competitive Advantage within a Specific Segment, Positioning within a Three-Dimensional
Business Landscape, and Southwest Airlines' Business Model.

Competitive Strategy is defined as the long term plan of a particular company in order to
gain competitive advantage over its competitors in the industry. It is aimed at creating
defensive position in an industry. Such type of strategies play a very important role when
industry is very competitive and consumers are provided with almost similar products.

Before devising a competitive strategy, one needs to evaluate all strengths, weaknesses,
opportunities, threats in the industry and then go ahead which would give one a
competitive advantage. Understanding competition, studying customer needs, evaluating
their strengths & weakness etc are all an important aspect of marketing strategy.
Companies can study & evaluate on the basis of their market share, SWOT analysis etc,
which would eventually help them drive business & sales revenue.

Types of competitive strategies by Porter

According to Michael Porter, competitive strategy is devised into 4 types:


1. Cost Leadership
Here, the objective of the firm is to become the lowest cost producer in the industry and is
achieved by producing in large scale which enables the firm to attain economies of scale.
High capacity utilization, good bargaining power, high technology implementation are some
of factors necessary to achieve cost leadership. e.g Micromax phones
2. Differentiation leadership
Under this strategy, firm maintains unique features of its products in the market thus
creating a differentiating factor. With this differentiation leadership, firms target to achieve
market leadership. And firms charge a premium price for the products (due to high value
added features). Superior brand and quality, major distribution channels, consistent
promotional support etc. are the attributes of such products .E.g. BMW, Apple

3. Cost focus
Under this strategy, firm concentrates on specific market segments and keeps its products
low priced in those segments. Such strategy helps firm to satisfy sufficient consumers and
gain popularity. E.g. Sonata watches

4. Differentiation focus
Under this strategy, firm aims to differentiate itself from one or two competitors, again in
specific segments only. This type of differentiation is made to meet demands of border
customers who refrain from purchasing competitors’ products only due to missing of small
features. It is a clear niche marketing strategy. E.g. Titan watches
Without following anyone of above mentioned competitive strategies, it becomes very
difficult for firms to sustain in competitive industry.

Examples of competitive strategy


There can be several examples based on the four parameters given by Michael Porter. Some
examples are given below:
1. Cost leadership: Micromax smart phones and mobile phones are giving good quality
products at an affordable price which contain all the features which a premium phone like
Apple or Samsung offers
2. Differentiation leadership: BMW offers cars which are different from other car brands.
BMW cars are more technologically advanced, have better features and have got
personalized services
3. Cost focus: Sonata watches are focused towards giving wrist watches at a low cost as
compared to competitors like Rolex, Titan, Omega etc
4. Differentiation focus: Titan watches concentrates on premium segment which includes
jewels in its watches. 
Submitted By :
Sumera Feroze Dervish
Pavan Kumar

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