Business Level Strategy

PORTER: GENERIC AND INTEGRAED

STRATEGIES

EARLY MOVER ADVANTAGES

HYPERCOMPETITION & THREATS

OTHER ALTERNATIVES
 Competitive Advantage

Cost Uniqueness
Broad
Focus Cost
Differentiation
Leadership
Competitive
Scope
Narrow Focused Cost Focused
Focus Leadership Differentiation

Four Generic Strategies

Fifth Integrated Cost Leadership/
Differentiated Strategy 2
 Cost Leadership

Produce or Deliver Goods & Services at the

Lowest cost with Acceptable features
Cut costs Provide Excellent Service

Effective Implementation of the Cost

Leadership Strategy Allows Firms to earn
Supernormal Profits
Why!! & How!!

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 Differentiation Strategy
Unique Attributes and features of a product Customer Value
Differentiation Unique Needs Premium Price
Ways of Differentiation
Superior customer service
Product Design
Product Innovation
State of the art Technology Quality

e.g. PVR Priya Village road Show

Eating Different
Shopping Ambience

Watching Movies
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 Integrated Cost Leadership/ Differentiation Strategy

Ability to Blend and Combine the cost leadership and

Differentiation Approach

Critical to Sustain Competitive Advantage

Higher
Differentiation Premium Price
Profits
Cost Leadership Low Costs

Difficult to Differentiate Substantially and Drop Prices Substantially

Firms Need Strategic Flexibility to use the Integrated Cost
Leadership/ Differentiated Strategy

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 3 Common Approaches

1. Flexible Manufacturing Systems

Flexibility of human, physical & information
resources
Produce Variety of Products
Low Cost Advantage
Quickly Responding to changes in Buyers Needs
Technology New
Less Manual Intervention

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 Common Approaches

2. Information Network
Information network linking suppliers,
Producers, distributors, and Customers
Invest heavily in ERP Software Systems to
improve Firms Efficiency
Link and Connect various departments & Data/
Knowledge Transfer
Exchange of Data between operators in the entire
supply chain
SAP Users Differentiate your products more
sharply & drive costs
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3. Total quality Management (TQM)
Increase Product quality
Improve Productivity
Differentiate High Price Market Share

Cost of Poor Quality Enormous

Cost of Poor Quality Workforce Train & Develop

Integration of Decision Process Participation from

all functional areas

Design Organizations Use T Q M systems & work

effective - SUPPORT
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 The Likelihood of Attack and Responses: RIVALRY

Drivers of Competition Inter Firm Rivalry

Awareness Motivation Likelihood of Attack

Likelihood of Response
Type of Action
Common Market Resource Access
Similar Resources
Ability to Attack & Respond
Size
Out come of Rivalry
Competitive Market Speed
Competitive Outcomes Innovation
Evolutionary Outcomes Product & Process
Quality

Competitive Rivalry Two or more Firms jockey with one another to seek an
advantageous Market Position
Awareness: Attacking firm being aware of the Mkt Commonality & Resource Similarity
Motivation: Incentive to Attack and respond 9
FIRST MOVER, SECOND AND LAST MOVER:

FIRST MOVER Firm initiating a competitive move

WHAT DOES IT DO??
Fund Allocation for R & D
Aggressive Advertising
Introductory Price
The more difficult and costly an advantage to imitate the longer
the firm receives the benefit
High risks due to uncertain nature of the markets & high
development costs

SECOND MOVER Firm reacting to a first movers

competitive action

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 LATE MOVER Responds to a competitive action, but after
time has elapsed after first movers action and second movers
response

Are they always at a Disadvantage? No!!

No Blueprints for first mover success
Late entrants conduct market research
Improve on offerings to meet desires/ needs
More time to perfect & develop innovative goods

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FIRMS ABILITY TO ATTACK AND RESPOND:
Resource Availability and ability to respond affect the
probability of firms response to actions
The four forces influencing interaction are:
(i) Size of the firm
(ii) Action & Response Speed
(iii)Innovation Ability
(iv)Product & Process Quality
+ (M A R WALMART
K ET
FIRM SIZE POWER
)
+ (ORDER OF ENTRY) Sustaining
SPEED
LE A D E R) * Actions &
A R K E T AN D
+ (M M EET NEEDS Outcomes
INNOVATION Q M ) M ER
( T O
+
D C US T
EXCEE
QUALITY
* TQM TOTAL COMMITMENT TO IMPROVE 12
EVERY PROCESS
 COMPETITIVE OUTCOMES

GRADUAL EROSION OF COMPETITIVE ADVANTAGE

Profit from EXPLOIT SLOW CYCLE MARKETS

Competitive
Advantage

COUNTER
LAUNCH
ATTACK

TIME

e.g. Monopolist Core competencies, Resources and capabilities

difficult to copy.
Protected Environment High Returns Over Time.

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 DROP PRICES FAST CYCLE
SUSTAIN THE MOMENTUM BY
OFFERING NEW PRODUCTS &
CAPTURING NEW MARKETS
Returns
from FIRM ADVANTAGE AGAIN
Replicable
Actions

TIME
SUDDEN EROSION IN COMPETITIVE ADVANTAGE AS FIRMS
ATTEMPT TO OBTAIN TEMPORARY ADVANTAGE
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ALTERNATIVE STRATEGY OPTIONS

FRONTAL ATTACK: Attacking the competitors in their core areas of

strength and capabilities

BYPASS ATTACK: Doing something radically different and opposite as

compared to what rival firms have been doing

OUTFLANKING: Designing action plans which leads to attacking rivals in

their weakest areas of operations

ENCIRCLEMENT STRATEGIES: This is an innovative move and

requires access to financial resources and commitments as firms tend to
attack rivals in all areas .

GUERILLA ATTACK: This is a strategy where firms adopt the HIT

AND RUN Policy i.e. constant hypercompetitive moves
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