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GENERIC STRATEGIES
Low-Cost Leadership
A strategy aimed at producing standardized products at low per-unit cost for consumers who are price-sensitive .
Examples: H.J Heinz because beans and canned vegetables do not permit much of a mark-up, the profit comes from the large volume of cans sold. Thus, Heinz goes to extraordinary lengths to reduce costs by even onetwentieth of a cent per can.
Wal-Mart is famous for squeezing its suppliers to ensure low prices for its goods especially that they are famous for their Every Day Low Pricing strategy (EDLP)
Dell Computer initially achieved market share by keeping inventories low and only building computers to order.
GENERIC STRATEGIES
Differentiation
A strategy aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively priceinsensitive .
Differentiation Themes
unique taste Dr. Pepper multiple features Microsoft Office wide selection and one-stop shopping Home Depot, Wal-Mart engineering design and performance BMW, Ferrari rapid product innovation prestige and distinctiveness Rolex, Chanel, Mercedes Benz top-of-the-line image and reputation Starbucks, Tiffany
GENERIC STRATEGIES
Focus
A strategy aimed at producing products and services that fulfill the needs of small groups of customers . Example: RTW stores selling plus-size clothes
GRAND STRATEGIES
Types of Grand Strategies
Concentrated growth Market development Product development Innovation Horizontal integration Vertical integration Concentric diversification Conglomerate diversification Turnaround Divestiture Liquidation Bankruptcy Joint ventures Strategic alliances Consortia
Innovation Strategy
Involves creating a new product life cycle, thereby making similar existing products obsolete.
Horizontal Integration Based on growth via acquisition of one or more similar firms operating at the same stage of the production-marketing chain
Vertical Integration
Involves acquiring firms That supply acquiring firm with inputs (backward integration) or Are customers for firms outputs (forward integration)
Textile producer
Textile producer
Shirt manufacturer
Shirt manufacturer
Clothing store
Clothing store
Diversification Strategies
Concentric Diversification
Involves acquisition of businesses related to acquiring firm in terms of technology, markets, or products
Diversification Strategies
Conglomerate Diversification
Involves acquisition of a business because it represents a promising investment opportunity Primary motivation is profit pattern of venture
Turnaround Strategy
A turnaround situation represents absolute and relative-to-industry declining performance of a sufficient magnitude to warrant explicit turnaround actions The immediacy of the resulting threat to company survival posed by the turnaround situation is known as situation severity Turnaround responses typically include two stages of strategic activities
Retrenchment Recovery response
Strategic Alliance
Involves creating a partnership between two or more companies that contribute skills and expertise to a cooperative project
Exists for a defined period Does not involve the exchange of equity