Generic strategies (sometimes referred to as competitive strategies) SG158 Generic strategies provide and direct organisational activities. Organisations mhave to select specific generic strategies that complement their competitive advantage. Competitive strategy is formulating a strategy that enables the organisation to compete against other organisations within its industry. In order to gain a competitive advantage, an organisation must decide to adopt one of these generic strategies. An organisation also decides on a grand strategy in order to strengthen the generic strategy in its pursuit of competitive advantage. Generic strategies fall into four categories: Cost leadership strategy: by being more cost-effective than its competitors; Differentiation strategy: by adding value to the product or service through differentiation; Focus strategy: by narrowing its focus to a special market segment which it can monopolise. Combining the cost and differentiation advantage adds another generic competitive strategy: Best-cost strategy: by offering the lowest (best) prices compared with rivals offering products with comparable attributes. Figure 6.2: Three generic competitive strategies p180 These strategies combine the organisation’s of operations” and competitive advantage to “scope derive the three generic types of competitive strategy. Generic strategy 1 | Cost-leadership strategy Organisation’s pursuing a cost-leadership strategy usually sell a product or service that appeals to a broad target market. Their products or services are highly standardised and nor customised to an individual’s tastes, needs or desires. According to David (2009), the cost leadership strategy emphasises the production of standardised products at a very low per-unit cost for price-sensitive consumers. To achieve a cost advantage, an organisation’s cumulative across its overall value chain must be lower than its competitors’ cumulative costs. There are tow ways to accomplish this: Out-manage rivals in the efficiency with which value chain activities are performed and in controlling the factors that drive the costs of value chain activities; Revamp the organisation’s overall value chain to eliminate or by-pass some cost-producing activities. The underlying premise of cost leadership is that, by making products with as few modifications as possible, the organisation can exploit the cost-reduction benefits that accrue from: High capacity utilisation; Economies of scale; Technological advances; and Learning and experience.
Generic strategies (sometimes referred to as competitive strategies) SG158 Generic strategies provide and direct organisational activities. Organisations mhave to select specific generic strategies that complement their competitive advantage. Competitive strategy is formulating a strategy that enables the organisation to compete against other organisations within its industry. In order to gain a competitive advantage, an organisation must decide to adopt one of these generic strategies. An organisation also decides on a grand strategy in order to strengthen the generic strategy in its pursuit of competitive advantage. Generic strategies fall into four categories: Cost leadership strategy: by being more cost-effective than its competitors; Differentiation strategy: by adding value to the product or service through differentiation; Focus strategy: by narrowing its focus to a special market segment which it can monopolise. Combining the cost and differentiation advantage adds another generic competitive strategy: Best-cost strategy: by offering the lowest (best) prices compared with rivals offering products with comparable attributes. Figure 6.2: Three generic competitive strategies p180 These strategies combine the organisation’s “scope of operations” and competitive advantage to derive the three generic types of competitive strategy. Generic strategy 1 | Cost-leadership strategy Organisation’s pursuing a cost-leadership strategy usually sell a product or service that appeals to a broad target market. Their products or services are highly standardised and nor customised to an individual’s tastes, needs or desires. According to David (2009), the cost leadership strategy emphasises the production of standardised products at a very low per-unit cost for price-sensitive consumers. To achieve a cost advantage, an organisation’s cumulative across its overall value chain must be lower than its competitors’ cumulative costs. There are tow ways to accomplish this: Out-manage rivals in the efficiency with which value chain activities are performed and in controlling the factors that drive the costs of value chain activities; Revamp the organisation’s overall value chain to eliminate or by-pass some cost-producing activities. The underlying premise of cost leadership is that, by making products with as few modifications as possible, the organisation can exploit the cost-reduction benefits that accrue from: High capacity utilisation; Economies of scale; Technological advances; and Learning and experience.
MNG3701-001_2011_4_e_study_notes_quantum.docx