Samenvatting
Blok 2.2
Strategisch management 2
,Strategic choices Oefenen met cases uit boek + goed
de ingestuurde vragen leren.
Companies need to make
fundamental choices. In this
figure you see these. These themes are the
basis of this chapter:
1) Generic strategies !!
Michael Porter introduced the term ‘Generic Strategy’ to mean basic types of competitive strategy
that hold across many kinds of business situations.
• Competitive Strategy is concerned with how a company, business unit or organisation
achieves competitive advantage in its domain of activity.
• Competitive Advantage is about how a company, business unit or organisation creates value
for its users, both greater than the costs of supplying them and superior to that of rivals.
Three generic strategies:
1. Cost leadership:
Involves becoming the lowest-cost organisation in a domain of activity.
Four key cost drivers that can help deliver cost leadership:
Lower input costs
Economies of scale
Experience
Product/process design
1
, Low cost should not be pursued in total disregard for quality. Businesses have two options
here:
- Parity – equivalent quality in terms of product or service features. The cost leader can then
charge the same price as rivals and make higher profits
- Proximity – only slightly lower quality allows the cost leader to offer a slightly lower price
and still make higher profits
2. Differentiation:
Involves uniqueness along some dimension that is sufficiently valued by customers to allow a
price premium
Two key issues to consider:
The strategic customer on whose needs the differentiation is based.
Key competitors: who are the rivals and who may become a rival.
The key drivers of differentiation are:
Product and service attributes – providing better or unique features (e.g. Apple or Dyson)
Customer relationships – customer service and responsiveness (e.g. Zalando); customisation
(e.g. SAP) or marketing and reputation (e.g. Coca Cola)
Complements – building on linkages with other products/services (Apple and iTunes)
3. a Cost focus
Identify areas where broader cost based strategies fail because of the added cost of trying to
satisfy a wide range of needs (e.g. Iceland Foods).
b Differentiation focus
Look for specific needs that broad differentiators do not satisfy so well (e.g. ARM Holdings in
the market for mobile phone chips).
Porter:
• It is best to choose which generic strategy to adopt and then stick rigorously to it.
• Failure to do this leads to a danger of being ‘stuck in the middle’ – doing no strategy well.
• The argument for pure generic strategies is controversial. Porter acknowledges that the
strategies can be combined (e.g. if being unique costs nothing)
Hybrid strategy
Combines different generic strategies.
The strategy clock !!
The strategy clock provides an alternative approach to generic strategy which gives more scope for
hybrid strategies.
It has two distinct features:
• It is focused on the prices to customers rather than the costs to organisations.
• The circular design allows for incremental adjustments in strategy rather than stark choices.
1. Differentiation strategies
2
Blok 2.2
Strategisch management 2
,Strategic choices Oefenen met cases uit boek + goed
de ingestuurde vragen leren.
Companies need to make
fundamental choices. In this
figure you see these. These themes are the
basis of this chapter:
1) Generic strategies !!
Michael Porter introduced the term ‘Generic Strategy’ to mean basic types of competitive strategy
that hold across many kinds of business situations.
• Competitive Strategy is concerned with how a company, business unit or organisation
achieves competitive advantage in its domain of activity.
• Competitive Advantage is about how a company, business unit or organisation creates value
for its users, both greater than the costs of supplying them and superior to that of rivals.
Three generic strategies:
1. Cost leadership:
Involves becoming the lowest-cost organisation in a domain of activity.
Four key cost drivers that can help deliver cost leadership:
Lower input costs
Economies of scale
Experience
Product/process design
1
, Low cost should not be pursued in total disregard for quality. Businesses have two options
here:
- Parity – equivalent quality in terms of product or service features. The cost leader can then
charge the same price as rivals and make higher profits
- Proximity – only slightly lower quality allows the cost leader to offer a slightly lower price
and still make higher profits
2. Differentiation:
Involves uniqueness along some dimension that is sufficiently valued by customers to allow a
price premium
Two key issues to consider:
The strategic customer on whose needs the differentiation is based.
Key competitors: who are the rivals and who may become a rival.
The key drivers of differentiation are:
Product and service attributes – providing better or unique features (e.g. Apple or Dyson)
Customer relationships – customer service and responsiveness (e.g. Zalando); customisation
(e.g. SAP) or marketing and reputation (e.g. Coca Cola)
Complements – building on linkages with other products/services (Apple and iTunes)
3. a Cost focus
Identify areas where broader cost based strategies fail because of the added cost of trying to
satisfy a wide range of needs (e.g. Iceland Foods).
b Differentiation focus
Look for specific needs that broad differentiators do not satisfy so well (e.g. ARM Holdings in
the market for mobile phone chips).
Porter:
• It is best to choose which generic strategy to adopt and then stick rigorously to it.
• Failure to do this leads to a danger of being ‘stuck in the middle’ – doing no strategy well.
• The argument for pure generic strategies is controversial. Porter acknowledges that the
strategies can be combined (e.g. if being unique costs nothing)
Hybrid strategy
Combines different generic strategies.
The strategy clock !!
The strategy clock provides an alternative approach to generic strategy which gives more scope for
hybrid strategies.
It has two distinct features:
• It is focused on the prices to customers rather than the costs to organisations.
• The circular design allows for incremental adjustments in strategy rather than stark choices.
1. Differentiation strategies
2
