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Strengthening a Company’s Competitive

Position: Strategic Moves, Timing, and


Scope of Operations
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LAUNCHING A
STRATEGIC
OFFENSIVES TO
IMPROVE A
COMPANY’S
MARKET POSITION
Launching a Strategic Offensives to Improve a
Company’s Market Position

• A leading market share

• Excellent profit margins

• Rapid growth
Choosing the Basics for Competitive Attack
▫ Grounded strategic offensives
▫ Exploiting competitor’s weaknesses
▫ Ignoring the need to tie a strategic offensive

▫ NOTE: The best offensives use a company’s most


competitive potent resources to attack rivals in those
competitive areas where they are weak.
Principal Offensive Strategy Options:
1. Offering an equally good or better product at a low cost price.

2. Leapfrogging

3. Pursuing continues product innovation to draw sales and market


share away from less innovative rivals.

4. Pursuing disruptive product innovation to create new markets.


Principal Offensive Strategy Options:
5. Adopting and improving on the good ideas of other companies
(rival or otherwise)

6. Using hit and run or “guerilla warfare tactics” to grab sales and
market share from complacent or distracted rivals.

7. Launching a preemptive strike to capture a rare opportunity or


secure an industry’s limited resources.
Choosing Which Rival to Attack
▫ Market leaders that are vulnerable

▫ Runner-up firms with weaknesses in areas where


challenger is strong

▫ Struggling enterprises that are on the verge of going under

▫ Small local and regional firms with limited capabilities


Blue Ocean Strategy
▫ Abandoning efforts to beat out other competitors in existing
markets and instead, investing a new industry or distinctive
market segments than renders existing competitors largely
irrelevant and allows company to create and capture
altogether new demand.

Note: Offers growth in revenues and profits by discovering or


inventing new industry segments that create altogether new
demand.
Using defensive strategies to Protect a Company’s
Market Position and competitive advantage

▫ Lowers the risk of being attacked

▫ Weaken the impact of any attack

▫ Influence challengers to aim their effort at other rivals

Note: Good defensive strategies can help protect competitive


advantage but rarely are the basis for creating it.
Using defensive strategies to Protect a Company’s
Market Position and competitive advantage
▫ Publicly announcing management’s commitment to maintain the firm’s
present market share

▫ Publicly committing the company to a policy of matching competitor’s


terms or prices

▫ Maintaining a war chest of cash and marketable securities.

▫ Making occasional strong counter response to the moves of weak


competitors to enhance the firm’s image as tough defender.
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FIRST MOVER,
FAST
FOLLOWER,
LATE MOVER
First Mover
• Pioneering helps build a firm's image and reputation with buyers.

• Early commitments to new technologies, new style components,


new or emerging distribution channels, and so on can produce an
absolute cost advantage over rivals.
First Mover

• First time customers remain strongly loyal to pioneering firms in


making repeat purchases;

• Moving first constitutes a pre-emptive strike making imitation


extra hard or unlikely
The Potential for Late Mover Advantages or First
Mover Disadvantages
• When pioneering leadership is more costly than followership and only
negligible experience or learning curve benefits accrue to the leader- a
condition that allows a follower to end up with lower costs than the
first mover.

• When the products of the innovator are somewhat primitive and do


not live up to buyer expectations, thus allowing a clever follower to win
disenchanted buyers away from the leader with better performing
products.
The Potential for Late Mover Advantages or First
Mover Disadvantages
• When potential buyers are skeptical about the benefits of a
new technology or product being pioneered by a first mover.

• When rapid market evolution(due to fast paced changes in


either technology or buyer needs and expectations) gives fast
followers and may be even cautious late movers the opening
to leapfrog a first mover's products with more attractive next
version products.
Deciding Whether To Be An Early Mover or Late
Mover:
• Does market take off depend on the development of
complimentary products or services that currently are not
available?
• Is new infrastructure required before buyer demand can surge?

• Will buyers need to learn new skills or adpapt new behaviors?


Will buyers encounter high switching costs?
Deciding Whether to be an Early Mover or Late
Mover:

▫ Are there influential competitors in a position to delay or


derail the efforts of a first mover?
STRENGTHENING
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A COMPANY'S
MARKET
POSITION VIA ITS
SCOPE OF
OPERATIONS
Scope of the Firm

▫ Scope of the firm - refers to the range of activities the firm


performs internally, the breadth of its product and service
offerings, the extent of its geographic market presence, and its
mix of businesses

▫ Example: Ralph Lauren Corporation


Scope of the Firm

▫ Horizontal Scope - range of product and service segments


that a firm serves within its focal market

▫ Vertical Scope - extent to which a firm's internal activities


encompass one, some, many, or all of the activities that
make up a industry's entire value chain system
Horizontal Merger and Acquisition Strategies

▫ Merger - the combining of two or more companies into a


single corporate entity

▫ Acquisition - a combination in which one company, the


acquirer, purchases and absorbs the operations of another,
the acquired
Horizontal Merger and Acquisition Strategies
▫ The difference between these two strategies relates more to the
details of ownership, management control, and financial
arrangements than to strategy and competitive advantage.

▫ Combining the operations of two companies via merger or


acquisition is an attractive strategic option for achieving operating
economies, strengthening the resulting company's competencies
and competitiveness, and opening avenues of new market
opportunity.
Five Objectives of Merger and Acquisition Strategies

1. Extending the company's business into new product categories.


2. Creating a more cost-efficient operation out of the combined
companies.
3. Expanding a company's geographic coverage
4. Gaining quick access to new technologies or complementary
resources and capabilities.
Five Objectives of Merger and Acquisition Strategies

5. Leading the convergence of industries whose boundaries


are being blurred by changing technologies and new market
opportunities.

▫ Mergers and acquisition sometimes fail to produce


anticipated results.
Company’s
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Scope of
Operation Via
Vertical
Integration
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Vertical Integration
Forward Integration Partial integration
-distribution -selected stages of
vertical chain
Backward integration
-supply chain Tapered integration
-outsourcing and
Full integration performing the activity
-all stages of vertical internally
chain
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Advantages of Vertical Integration

▫ Differentiation
▫ Eliminate dependency from suppliers
▫ Reduced cost
▫ Knows what is selling well
▫ Better quality of products/services
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Disadvantages of Vertical Integration


▫ Increased capital investment
▫ Increased business risk
▫ Increased vulnerability to technological changes
▫ Less flexibility in making product changes
▫ Poses all kinds of capacity matching problems
▫ Requires development of new skills and business capabilities
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Outsourcing
Strategies:
Narrowing the
Scope of
Operations
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Outsource
• An activity can be performed better or more cheaply outside.
• The activity is crucial to the firm’s ability to achieve sustainable
competitive advantage
• It improves organizational flexibility
• It reduces the company’s risk of exposure to changing technology
or buyer preferences
• It allows company to concentrate on its core business
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Strategic Alliance and Partnership


• Strategic Alliance- is a formal agreement between two or more
separate companies in which there is a strategically relevant
collaboration

• Joint Ventures- is a partnership involving the establishment of an


independent corporate entity that is jointly owned and controlled
by two companies
THE END

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