Question

1.) Briefly outline and describe the five generic competitive strategies? Illustrate a specific example of each generic strategy in your description?

Your answers will be short essays and should be three full paragraphs or longer.

Answer 1

Competitive strategies can be defined as long-term action plans for achieving business growth. The appropriate strategies are adopted after analyzing the market conditions and one’s own strengths and weaknesses. The five generic competitive strategies are:

1. Cost leadership

This competitive strategy emphasizes leadership by cost reduction. Higher profitability and increased market share can be achieved by adopting correct cost reduction strategies. However one of the drawbacks is that innovation can be impacted as less investment is likely on research and development. Example: Walmart.

2. Product differentiation

Under this strategy, an organization stresses the unique benefits and features of its products to achieve a competitive edge and differentiate itself from its competitors. However on the negative side, revenues may be impacted if the products are not priced correctly. Ex: T-Mobile

3. Focused cost leadership

This is a type of cost leadership where an organization competes on the price of its products. However, under this strategy, it caters only to an exclusive market. A significant drawback is that it is comparatively difficult to predict consumer demand as it is prone to market fluctuations and economic conditions. Ex: Papa Lui’s pizza.

4. Focused differentiation

This is a type of cost leadership where an organization stresses the unique benefits and features of its products. However, similar to focused cost leadership, this strategy is used to cater to a niche market. By using this strategy, an organization is in a position to charge a higher premium for its products. It has similar drawbacks to the earlier strategy. Ex: BMW cars