CHAPTER 5 : THE FIVE GENERIC COMPETITIVE STRATEGIES: WHICH ONE TO EMPLOY?

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What are the key factors that distinguish one strategy from another? For this topic, its focuses on the five generic competitive strategies and their functions. Let’s know further explanation about the five generic competitive functions.

For the low-cost provider like Air Asia, they are striving to achieve overall costs than rivals on products that attract a broad spectrum of buyers. And as we can see now, Air Asia services get a great response and gain greater total profits from the customers better than MAS as they offer cheaper airfares. 

Focus ;D

Secondly, broad differentiation strategies. They use higher prices and have their own brand loyalty that bonds buyers to the firm products. A uniqueness driver is a factor that can have a strong differentiating effect. Other example for this strategy is ROLEX, and HARLEY-DAVIDSON. Remember the 4 things that Broad Differentiation offer to customers that rivals cannot. Lower the buyers overall cost, tangible features, intangible features and signal the value.

Next, is Focused Strategies that divided into two approaches which are Focused Low-Cost and Focused Market Niche Strategy. Both of them is very attractive because its big enough to be profitable and the rivals have no little or no interest in the target segment. But , whatever strategies a company use, they  have their own advantages and risk. As for Focused Strategies, some of the risks is as attractiveness of the segment increases, it draws in more competitors, intensifying rivalry and splintering segment profits. Example: GAP, Porsche and Ferrari.

Main referrence .
Crafting and executing strategy

Last but not least, best cost provider. This kind of strategies is a combination of all the four other strategies above. It is a combination of Low-Cost Providers and High-End Differentiators as There is competitive space near the middle of the market for a competitor with either a medium-quality product at a below-average price or a high-quality product at an average or slightly higher price.

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GENERIC STRATEGIES

: Place each firm you know  in one of the four categories of generic business strategies.

  What are some common features for firms you have placed within each category?