S.2.5 Competing with Rivals Flashcards
Corporate strategy
Industry attractiveness:
Which industries should we be in?
Business strategy
Competitive advantage:
How should we compete?
Differentiation advantage
is the creation of a service offering that is perceived as unique by the client and moreover obtainable at “customary” cost.
Cost advantage
is the creation of a comparable service offering at lower costs than competitors
Broad target + Low cost
Cost leadership
Broad target + Differentiation
Differentiation
Narrow target + Low cost
Cost focus
Narrow target + Differentiation
Differentiation focus
Create buyer value
- Lowering buyer cost
- Raising buyer performance
Commodity trap: Deterioration
Caused by a firm with a dominat low cost-low
benefit position that swallows market share
and upsets the positioning for those around it.
Commodity trap: Proliferation
Caused by multiple threats due to substitutes, imitators, market fragmentation, new product innovation. Opens new pricebenefit positions, surrounding and eroding the firm‘s product uniqueness.
Commodity trap: Escalation
Caused by rising benefits for the same or lower price. Rivals jockey to offer more value to customers driving competition down towards the lower right-hand corner of the price-benefit map.
Red oceans
- represent all the industries in existence today: the known market space
- competitive rules are well understood
- companies try to outperform their rivals to get a greater share of existing demand
- prospects for profits and growth are reduced as the market place gets more and more crowded
Blue oceans
- denote all the industries NOT in existence today: the unknown market space, untainted by competition
- demand is created rather than fought over
- ample opportunity for profitable and rapid growth
