Chapter VIII

TAILORING STRATEGY TO FIT SPECIFIC INDUSTRY AND COMPANY SITUATIONS

 

I. Nine Types of Situations (1-9)

1.) Strategies for Competing in Emerging Industries

bullet Win race early with broad/focused differentiation
bullet Perfect technology/improve quality, etc.
bullet Adopt emerging technology quickly
bullet Form strategic alliances with key suppliers
bullet Pursue new customer groups/geographic areas, etc.
bullet Create product awareness, then build brand loyalty
bullet Use price cuts
bullet Etc.

2.) Strategies for Competing in Turbulent, High Velocity Markets (See Fig. 8.1, page 207)

bullet Invest aggressively in R&D
bullet Respond quickly to new events, new rivals and new developments
bullet Rely on strategic partnerships with outside suppliers
bullet Initiate fresh actions every few months
bullet Keep products fresh and exciting

3.) Strategies for Competing in Mature, Slow Growth Industries

bullet Note: changes that can take place in an industry's competitive environment
bullet Slow demand creates greater competition
bullet Buyers drive price down
bullet More importance on cost and service
bullet Production capacity tops out
bullet International competition increases
bullet Industry profitability falls
bullet M&A increases
bullet Prune marginal products and models
bullet Emphasize value chain
bullet Focus on cost reduction
bullet Increase sales to present customers
bullet Purchase rival firms at low prices
bullet Expand internationally
bullet Build new, more flexible capabilities

4.) Strategies for competing in Stagnant/Declining Industries

bullet Pursue focused strategy on niche growth segments
bullet Stress differentiation based on quality improvements/product innovation
bullet Drive costs down!

5.) Strategies for Competing in Fragmented Industries

bullet Construct formula facilities (McDonalds)
bullet Become low cost producer
bullet Specialize by product type
bullet Specialize by customer type
bullet Focus on geographic area

6.) Strategies for Companies Pursuing Rapid Growth

bullet Fortify and extend position in existing business
bullet Enter new business with growth potential
bullet Plant seeds for businesses that do not exist

7.) Strategies for Industry Leaders

bullet Stay on the offensive: New product uses, attract new users, more frequent use, etc.
bullet Fortify and defend: raise competitive ante, introduce new products, etc.
bullet Muscle flexing: use muscle to encourage runner ups to be followers

8.) Strategies for Runner up Positions

Note: avoid attacking a leader head-on

bullet Vacant niche strategy: must be profitable and have growth potential
bullet Build market share: see bullet point list, page 279
bullet Specialist strategy: build competitive advantage through product uniqueness
bullet Superior product: use differentiation based focused strategy keyed to unique attributes
bullet Content follower: use approaches that will not provoke retaliation
bullet Growth via acquisition: merge with weaker, rival firms
bullet Distinctive image strategy: use prestige, low price, etc., to attract discerning buyers

9.) Strategies for Weak Businesses and Those in Crisis

bullet Turnaround Strategies for Weak Businesses
bullet Liquidation: sell out
bullet Harvest strategy: maximize short term cash flows as you prepare to exit market
bullet Turnaround Strategies for Businesses in Crisis
bullet Sell off assets: when cash flow is critical
bullet Revise strategy: overhaul internal processes, merge, retrench, etc.
bullet Boost revenues: through price cuts, sales promotions, etc.
bullet Cut costs: only if value chain is flexible enough to allow cutting
bullet Combination effort: combine the above.
bullet Note: turnaround tends to be risky. It is often too late when actions are implemented

Note: See page 229 for the Ten Commandments for Crafting Successful Business Strategies and table 8.1 for a sample strategic action plan.

Next Steps:  Please review the PowerPoint Overview slides (1-39) for this chapter.  Then proceed to the Lecture Notes for chapter nine.

 
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