Management & Organization Summary
Strategies
A strategy is the companies’ action plan that defines the basic way in which
management intends to:
1. Grow the business
2. Build a loyal clientele and outperform competitors through a specific
competitive advantage
3. Will operate each business function
4. Boost performance
Competitive Strategy
A competitive Strategy is aimed at achieving a Competitive Advantage;
some type of advantage that the company has over rivals in attracting buyers.
Buyers will choose a supplier who offers a better value offer to them than
competitors do.
A product can be a perceived ‘better value offer’ in many ways:
It has a certain Function and/or features that competing products do not have
or have less of
It has a better Quality
Brand image and promotional activities
More convenient, easier cheaper or less risky to purchase it.
Less expensive
Factors that can enhance this value are for example:
Wide availability in stores that are frequented by
Better warranty, service, instructions for use, etc.
Good company reputation
Sales through a knowledgeable sales force
Strategy to create a superior value offer
Broad market approach: the company tries to attract many or all customer
groups in a certain market
Narrow market approach: the company focuses on a specific segment of the
market
1
,2
, Porter’s Competitive Strategy grid
Cost leadership: the producer is being the low cost producer in a certain
industry. By achieving high production economies of scale can be realised,
resulting in having the competitive advantage of being a cost leader, which will
lead to a high market share. Succeeding being a cost leader will often result in
the following strengths:
Efficient distribution channels
High efficiency
High level of efficient manufacturing and expertise
Differentiation: By using this strategy the company is aiming for distinguishing
the products of services from the competitors in the industry. This strategy can
be profitable because the customers will be loyal and therefore will pay a high
price for the products. So this strategy needs strong marketing efforts and having
a good sales team to communicate the strengths to the customer to create a
good reputation. Succeeding the differentiation strategy will lead to the following
results:
Reduced rivalry among competitor
Reduced bargaining power of large buyers.
Establish entry barriers
Focus: when using the focus strategy the organization is focusing on a specific
narrow market or buyer group. The organization can either choose the cost
leadership or differentiation strategy but only then for the narrow market.
Cost Leadership Strategies
The strategic goal of the Cost Leader is to be the provider with the lowest cost in
the industry:
Which does NOT necessarily mean the lowest cost POSSIBLE
Which does not necessarily mean with the lowest price
Which does not necessarily mean a ‘cheap’ product
Does not mean that there can only be one cost leader in an industry
3
Strategies
A strategy is the companies’ action plan that defines the basic way in which
management intends to:
1. Grow the business
2. Build a loyal clientele and outperform competitors through a specific
competitive advantage
3. Will operate each business function
4. Boost performance
Competitive Strategy
A competitive Strategy is aimed at achieving a Competitive Advantage;
some type of advantage that the company has over rivals in attracting buyers.
Buyers will choose a supplier who offers a better value offer to them than
competitors do.
A product can be a perceived ‘better value offer’ in many ways:
It has a certain Function and/or features that competing products do not have
or have less of
It has a better Quality
Brand image and promotional activities
More convenient, easier cheaper or less risky to purchase it.
Less expensive
Factors that can enhance this value are for example:
Wide availability in stores that are frequented by
Better warranty, service, instructions for use, etc.
Good company reputation
Sales through a knowledgeable sales force
Strategy to create a superior value offer
Broad market approach: the company tries to attract many or all customer
groups in a certain market
Narrow market approach: the company focuses on a specific segment of the
market
1
,2
, Porter’s Competitive Strategy grid
Cost leadership: the producer is being the low cost producer in a certain
industry. By achieving high production economies of scale can be realised,
resulting in having the competitive advantage of being a cost leader, which will
lead to a high market share. Succeeding being a cost leader will often result in
the following strengths:
Efficient distribution channels
High efficiency
High level of efficient manufacturing and expertise
Differentiation: By using this strategy the company is aiming for distinguishing
the products of services from the competitors in the industry. This strategy can
be profitable because the customers will be loyal and therefore will pay a high
price for the products. So this strategy needs strong marketing efforts and having
a good sales team to communicate the strengths to the customer to create a
good reputation. Succeeding the differentiation strategy will lead to the following
results:
Reduced rivalry among competitor
Reduced bargaining power of large buyers.
Establish entry barriers
Focus: when using the focus strategy the organization is focusing on a specific
narrow market or buyer group. The organization can either choose the cost
leadership or differentiation strategy but only then for the narrow market.
Cost Leadership Strategies
The strategic goal of the Cost Leader is to be the provider with the lowest cost in
the industry:
Which does NOT necessarily mean the lowest cost POSSIBLE
Which does not necessarily mean with the lowest price
Which does not necessarily mean a ‘cheap’ product
Does not mean that there can only be one cost leader in an industry
3
