chapter 6- bpsm

Download Chapter 6- BPSM

Post on 05-Apr-2018

224 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

  • 7/31/2019 Chapter 6- BPSM

    1/31

    Ch. 6-

    Generic Strategies

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    2/31

    Strategies Formulation

    Strategies are formulated at 3 different levels Objectives are set at Corporate level. Rellocation of resources so as to nurture the portfolio

    is the important objective Various strategies decided at corporate level may be- Stability Strategy Expansion Strategy Retrenchment Strategy Then individual business formulate their own stratgeies

    so as to achieve the objectives set at corporate level.

    Use of BCG matrix for rellocation of resourcesProf. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    3/31

    The Central Role of Customers

    In selecting a business-level strategy, the firmdetermines

    1. who it will serve2. what needs those target customers have

    that it will satisfy3. how those needs will be satisfied(Abells 3 dimentions of Business definition- Customer needs, Customer Groups

    & Technology) Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    4/31

    Generic Strategies

    M. Porter suggested 3 generic strategies tocompete in the environment of competition.

    Company adopts any one of these 3 strategies, onthe basis of-

    1) The entry point of the firm elative to theindustrys life cycle.

    2) Its present position & the internal resourcecapabilities3) The structure of the industry (5 Forces) &4) The nature of forces driving the industry.

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    5/31

    Industry Life Cycle

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    6/31

    Industry Life-Cycle Stages:Strategic Implications

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    7/31

    Industry Life-Cycle Strategies

    In the Introduction Stage: Products are unfamiliar to consumers

    Market segments not well defined Product features not clearly specified Competition tends to be limitedStrategies for the Introduction Stage: Develop product and get users to try it Generate exposure so product becomes

    standard Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    8/31

    Industry Life-Cycle Strategies

    The Growth Stage is: Characterized by strong increases in sales Attractive to potential competitors

    Strategies for the Growth Stage: Brand recognition Differentiated products Financial resources to support value-chain activities

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    9/31

    Industry Life-Cycle Strategies

    In the Maturity stage: Aggregate industry demand slows

    Market becomes saturated, few new adopters Direct competition becomes predominant Marginal competitors begin to exitFor the Maturity Stage: Efficient manufacturing operations and process

    engineering Low costs (customers become price sensitive)

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    10/31

    Industry Life-Cycle Strategies

    In the Decline Stage: Industry sales and profits begin to fall Strategic options become dependent on the actions

    of rivalsFor the Decline Stage Maintaining

    Exiting the market Harvesting Consolidation

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    11/31

    Turnaround Strategies in the Life Cycle

    Turnaround strategy a strategy that reverses a firms decline in

    performance and returns it to growth andprofitability.

    Asset and cost surgery Selective product and market pruning Piecemeal productivity improvements

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    12/31

    Current market position of Britannia biscuits

    INTR

    ODUCTION G

    ROWTH

    MATURI

    TY

    DECLINE

    Time

    les

    TreatPure Magic

    Little HeartsMarieNice

    Good DayTiger

    Nutri Choice

  • 7/31/2019 Chapter 6- BPSM

    13/31

    Business Level Strategy

    Business-level strategy : an integrated andcoordinated set of commitments andactions the firm (Business Unit) uses togain a competitive advantage by exploitingcore competencies in specific product

    markets

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    14/31

    Generic Strategy

    The generic strategies are nothing but theapproaches of the company to fight against

    competitors ( In general/Commonstrategies. 3 Generic Strategies are-

    - Low Cost Leadership- Differentiation- Focus

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    15/31

  • 7/31/2019 Chapter 6- BPSM

    16/31

    Strategic Orientation Porters Three Generic Strategies

    UniquenessLow CostPosition

    Strategic Advantages

    DifferentiationOverall CostLeadership

    Focus

    FocusDifferentiation

    Focus Low Cost

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    17/31

    Three Generic Strategies

    Overall cost leadership Low-cost-position relative to a firms peers Manage relationships throughout the entire

    value chain Differentiation

    Create products and/or services that areunique and valued

    Non-price attributes for which customerswill pay a premium

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    18/31

    Three Generic Strategies

    Focus strategy Narrow product lines, buyer segments, or

    targeted geographic markets Attain advantages either through

    differentiation or cost leadership

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    19/31

    Examples

    Companies pursuing an overall costleadership strategy

    McDonalds

    Wal-Mart Companies pursuing a differentiation

    strategy Harley Davison

    Apple Companies pursuing a focus strategy

    Rolex Lamborghini

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    20/31

    Strategic Orientation Porters Three Generic Strategies

    UniquenessLow CostPosition

    Strategic Advantages

    Differentiation Overall CostLeadership

    Focus

    Focus Differentiation Focus Low Cost

  • 7/31/2019 Chapter 6- BPSM

    21/31

    Cost Leadership Strategy

    An integrated set of actions designed toproduce or deliver goods or services at thelowest cost, relative to competitors with

    features that are acceptable to customers relatively standardized products features acceptable to many customers

    lowest competitive priceEx- Toyota, are very good not only at producing high qualityautos at a low price, but have the brand and marketing skillsto use a premium pricing policy.

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    22/31

    Cost Leadership Strategy

    Cost saving actions required by this strategy: building efficient scale facilities tightly controlling production costs and

    overhead minimizing costs of sales, R&D and service building efficient manufacturing facilities

    monitoring costs of activities provided byoutsiders simplifying production processes

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    23/31

    Overall Cost Leadership

    Experience curve refers to how business learns to lower

    costs as it gains experience with productionprocesses

    with experience, unit costs of productiondecline as output

    increases in mostindustries

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    24/31

    Differentiation

    The Differentiation can be attained on thebasis of

    Prestige or brand image Technology Innovation Features

    Customer service Dealer network

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    25/31

    Differentiation

    Firms may differentiate along severaldimensions at once

    Successful differentiation requiresintegration with all parts of a firms valuechain

    An important aspect of differentiation is

    speed or quick response There is also the chance that any

    differentiation could be copied bycompetitors

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    26/31

    Focus

    Focus strategy involves concentratingon a-

    Particular customer Product line Geographical area

    Channel of distribution Niche market

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    27/31

    Focus

    Focus strategy is that the firm isbetter able to serve its limited segment

    than competitors serving a broaderrange of customers Firms may thus be able to differentiate

    themselves based on meeting customerneeds through differentiation orthrough low costs and competitivepricing for specialty goods

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    28/31

    Focus

    Focus is based on the choice of a narrowcompetitive scope within an industry

    Firm selects a segment or group ofsegments (niche) and tailors its strategy toserve them

    Firm achieves competitive advantages bydedicating itself to these segmentsexclusively

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    29/31

    Focus

    Cost focus firm strives to create a cost advantage in its

    target segment Differentiation focus

    firm seeks to differentiate in its target market

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    30/31

    Focus: Improving Competitive Position

    Focus Creates barriers of either cost leadership or

    differentiation, or both Used to select niches that are least vulnerable

    to substitutes or where competitors areweakest

    Prof. Prashant B. Kalaskar

  • 7/31/2019 Chapter 6- BPSM

    31/31

    Title

    P f P h B K l k