Strategic Directions and methods of development TYPES OF
- Slides: 14
Strategic Directions and methods of development
TYPES OF STRATEGY �PRICE BASED �DIFFERENTIATION BASED �HYBRID AND FOCUS STRATEGIES
PRICE BASED �NO FRILLS (LOW PRICE FOR A PRODUCT PERCIEVED AS INFERIOR) �LOW PRICE STRATEGY (LOW PRICE FOR A PRODUCT BELIEVED TO BE AS GOOD AS COMPETITORS)
PROBLEMS WITH PRICE BASED STRATEGIES �PROFIT MARGIN REDUCTION �INABILITY TO REINVEST IN THE PRODUCT
DIFFERENTIATION STRATEGIES �PRODUCTS THAT ARE DIFFERENT FROM COMPETITORS IN A WAY THAT IS VALUED BY CONSUMERS
HYBRID STRATEGY �LOOKS TO BOTH PROVIDE A DIFFERENT PRODUCT AND ALSO A LOWER PRICE
FOCUSED DIFFERENTIATION �SEEKING TO PROVIDE A PRODUCT THAT IS WELL PERCIEVED BY THE PUBLIC, TO SUCH AN EXTENT THAT THEY ARE PREPARED TO PAY A HIGHER PRICE FOR IT
FAILURE STRATEGIES �THESE ARE STRATEGIES THAT OFFER NEITHER A PRICE BASED OR QUALITY BASED ADVANTAGE, GENERALLY THESE WILL BE: �REDUCE QUALITY OF PRODUCT WHILE MAINTAINING PRICE �REDUCE PRODUCT AND RAISE PRICE �INCREASE PRICE AND KEEP THE PRODUCT THE SAME.
SEEKING COMPETITIVE ADVANTAGE (THE REASONS WHY THIS WORKS ARE) �PRICE BASED �Accepting a lower profit margin for more sales �Your organisation may have lower costs or simply be trying a short term strategy to drive people out of the market. �The companies production costs are lower making it viable.
�Differentiation based strategies �Make it harder to imitate �Inability to move or trade competencies/skills making duplication difficult �Intangiable assets such as brand that cannot be replicated. �High costs/rists of switching to a new product for competitors
Where a business achieves market dominance in can achieve “Lock In” of it’s competitive advantage �This is generally based on: �Size/high market share �Be introduced early to a developing market
Where there are greater options businesses should seek to �Act Speedily �Innovate �Change readily A way to avoid/limit competition is to collaborate,
For greater depth please read: �Exploring Corporate Strategy 7 th Ed Gerry Johnson Et Al
In your groups for the assignment: �Write an overview of your chosen company �Establish which strategy your business is following and why. �Begin writing your Power. Point for this work (points 1 & 2 covered today)