The Five Generic Competitive Strategies
The Five Generic Competitive Strategies
By
Jennifer Williams There are five generic business strategies that companies choose from when trying to successfully compete within their respective industries. This is the first choice a company must make, even before deciding an overall strategy. These generic business strategies include low-cost provider strategy, broad differentiation strategy, best-cost provider strategy; focused strategy based on low costs, and focused strategy based on differentiation. These strategies have many advantages as well as disadvantages. Choosing which one to use depends on what market position a company wants to pursue. Deciding to be more offensive or defensive also plays a role in choosing a business strategy. Some of these strategies are focused while others appeal to a broader spectrum of customers. These strategies can also be combine which allows a company to be even more competitive or to appeal to a new customer base (Thompson, Strickland, & Gamble, 2010) Companies can also choose to start with one strategy and switch to another one to achieve a business turnaround. Although many companies use the same strategy, no two companies will ever really have the same business strategies. This is because of the countless unique variations that can be added by each company, which can yield as many business strategies as there are businesses. (Generic Business Strategies, 2010) The low-cost provider strategy is setting a lower price than the competitors while trying to appeal to more customers. This strategy is very powerful in a market where there are price sensitive buyers. When companies strive for cost advantage over their competitors, they must include special features and services that buyers consider essential. (Thompson, Strickland, & Gamble, 2010) Also, this strategy can be very prevailing when demand is price elastic; all firms the industry produce essentially the standardized products; there are not
By
Jennifer Williams There are five generic business strategies that companies choose from when trying to successfully compete within their respective industries. This is the first choice a company must make, even before deciding an overall strategy. These generic business strategies include low-cost provider strategy, broad differentiation strategy, best-cost provider strategy; focused strategy based on low costs, and focused strategy based on differentiation. These strategies have many advantages as well as disadvantages. Choosing which one to use depends on what market position a company wants to pursue. Deciding to be more offensive or defensive also plays a role in choosing a business strategy. Some of these strategies are focused while others appeal to a broader spectrum of customers. These strategies can also be combine which allows a company to be even more competitive or to appeal to a new customer base (Thompson, Strickland, & Gamble, 2010) Companies can also choose to start with one strategy and switch to another one to achieve a business turnaround. Although many companies use the same strategy, no two companies will ever really have the same business strategies. This is because of the countless unique variations that can be added by each company, which can yield as many business strategies as there are businesses. (Generic Business Strategies, 2010) The low-cost provider strategy is setting a lower price than the competitors while trying to appeal to more customers. This strategy is very powerful in a market where there are price sensitive buyers. When companies strive for cost advantage over their competitors, they must include special features and services that buyers consider essential. (Thompson, Strickland, & Gamble, 2010) Also, this strategy can be very prevailing when demand is price elastic; all firms the industry produce essentially the standardized products; there are not
References: Generic Business Strategies. (2010). www.scrbd.com/doc/generic-business-strategies.com. Kuzmicki, Jana F. “The Five Generic Competitive Strategies.” (2009) The McGraw-Hill Companies. Microsoft PowerPoint Presentation. Thompson, Arthur A., Strickland A. J., Gamble, John E. (2010). Crafting and Executing Strategy. McGraw-Hill Irwin. (Ed.) Boston