The Plan of Action that managers adopt to use resources & distinct competencies to gain a competitive advantage
The way a company decides to group customers (based on important differences in needs/preferences)
Two Basic BLS
Cost Leadership: outperforming competitors by doing everything it can to lower the cost of production Differentiation: Satisfy the Needs of a limited customer group/segment
These can be Focused (concentrated on specific geo area, type of customer, or segment of product line) or Broad
What are the Pros and Cons of Cost leadership?
Pros: Charge lower price, make same profit & withstand competition based on price Cons: Easy to lose sight of changing customer taste, competition will try to beat you are your own game
What are the Pros and Cons of Differentiation?
Pros: customers develop brand loyalty & creates barrier to entry for competition Cons: Difficult to maintain uniqueness in eye's of consumer & threat of substitutable goods
What are the Pros and Cons of being Focused?
Pros: Customer loyalty lessens threat of sub goods & gain power over buyers b/c they cannot get same product elsewhere Cons: Suppliers hold power which makes firm vulnerable to change & vulnerable to attack so must defend niche constantly
In a fragmented/growing industry, what strategy should you adopt?
What strategy should be implemented in a Mature Industry?
Anything that will secure competitive advantage & industry profitability simultaneously.