BUS 596 Independent Study Chapter 2&3

Chapter 2 & 3 Generic Strategies & Framkwork for Competitor Analysis

Overall cost leadership, differentiation and focus are three generic alternatives to outpace other competitors. Goal of competitive strategies is not to terminate other competitors but to ensure the combination of the firm's key functional features perform better than others. A low cost position does protect the firm against all five competitive forces. However, low cost is not always the best leverage for high tech industries or consumer electronics with short product life cycle, especially when new comers always use the price cutting strategy. The key to make a firm to survive is by focusing the need of specific customer(s).

Differentiation can be achieved by feature of design, brand image, technology, service and dealer network. Differentiation will generate higher returns and down play the buyer’s power and create loyalty of the customer. The author highlights that “stuck in the middle” is the extremely poor strategy situation. The book also took SHARP as the example of adopting aggressive brand recognition strategy (i.e. differentiation) in parallel with cost leadership to compete with Sony and Panasonic. Similar strategy has been adopted by Samsung.

The goal of competitor’s analysis is to develop a profile of the likely strategy changes each competitor might take, initiate and response to the range of feasible strategic moves. The analysis includes 4 major components: future goals, current strategy, assumptions and capabilities. Identifying the competitor to be examined and knowing their goals and strategic positions can mitigate the conflict and possible hostile retaliation. Knowing the competitor’s weakness will help the firm take advantage from it. Figure 3-2 summaries the area of strength and weakness should further investigate, which includes following key items: CEO ability, marketing & selling, operations, research & engineering, overall costs, financial strength, product and channel of distribution, core capabilities, ability to grow, response to change and ability to adapt to change. Figure 3-3 list functions of competitor intelligence system should cover. In addition Appendix A & B covers techniques of competitor and industry analysis.