Intro: Midterm discussion focusses on the different The competitive strategy aims at gaining a competitive

matrices on how to evaluate position of your business advantage in the marketplace against competitors.
internally, externally, competitive advantage, market
share, market growth and even the product portfolio and in And competitive advantage comes from strategies that lead
every discussion of each matrix we are often meeting to some uniqueness in the marketplace. Winning
different strategies for each quadrant of the matrixes, with competitive strategies are grounded in sustainable
this introduce now the learning objectives. competitive advantage.

Before discussing the levels of strategies define again what Examples of the competitive strategy include
is the meaning of strategies (ask the class) differentiation strategy, low-cost strategy, and focus or
market-niche strategy.
Give them an overview of strategies for Large company
and small company: Business strategy is concerned with actions that managers
undertake to improve the market position of the company
Definition: through satisfying the customers. Improving market
position implies undertaking actions against competitors in
Corporate-level strategy the industry.

Corporate strategy defines the markets and businesses in Thus, the concept of competitive strategy (as opposed to
which a company will operate. cooperative strategy) has a competitor-orientation. The
objective of competitive strategy is to win the customers’
Corporate strategy is formulated at the top level by the heart through satisfying their needs, and finally to
top management of a diversified company (in our outcompete the competitors (or rival companies)
country, a diversified company is popularly known, as and attain competitive advantages.
‘group of companies’, such as Alphabet Inc.). Such a
strategy describes the company’s overall direction in terms The success of a competitive strategy depends on the
of its various businesses and product lines. company’s capabilities, strengths, and weaknesses in its
competitors’ capabilities, strengths, and weaknesses.
Corporate strategy defines the long-term objectives and
generally affects all the business-units under its umbrella. In doing business, companies confront a lot of strategic
issues. Management has to address all these issues
A corporate strategy, for example, of P&G may be effectively to survive in the marketplace. Business strategy
acquiring the major tissue paper companies in Canada to deals with these issues, in addition to’how to compete.
become the unquestionable market leader.
A business-level strategy is the set of strategic alternatives
The corporate-level strategy is the set of strategic from which an organization chooses as it conducts
alternatives from which an organization chooses as it business in a particular industry or market.
manages its operations simultaneously across several
industries and several markets. Such alternatives help the organization to focus its efforts
on each industry or market in a targeted fashion.
Business-level strategy
Functional strategy
Business strategy defines the basis on which firm wilt
compete. A functional strategy is, in reality, the
departmental/division strategy designed for each
It is a business-unit level strategy, formulated by the senior organizational function.
managers of the unit. This strategy emphasizes the
strengthening of a company’s competitive position of Thus, there may be production strategy, marketing
products or services. strategy, advertisement strategy, sales strategy, human
resource strategy, inventory strategy, financial strategy,
Business strategies are composed of competitive and training strategy, etc.
cooperative strategies.
A functional strategy refers to a strategy that emphasizes a
The business strategy encompasses all the actions and particular functional area of an organization. It is
approaches for competing against the competitors and the formulated to achieve some objectives of a business unit
ways management addresses various strategic issues. by maximizing resource productivity.

As Hitt and Jones have remarked, the business strategy Sometimes functional strategy is called departmental
consists of plans of action that strategic managers adopt strategy since each business-function is usually vested
to use a company’s resources and distinctive competencies with a department.
to gain a competitive advantage over its rivals in a market.
For example, the production department of a
Business strategy is usually formulated in line with the manufacturing company develops production strategy’ as
corporate strategy. The main focus of the business strategy the departmental strategy, or the training department
is on product development, innovation, integration formulates ‘training strategy’ for providing training to
(vertical, horizontal), market the employees.
development, diversification and the like.
A functional strategy is concerned with developing Horizontal integration is best when:
distinctive competence to provide a business, unit with a a. there is no government regulation that prohibit
competitive advantage. monopolistic characteristics in the area or region,
b. when the company competes in growing industry,
Each business unit or company has its own set of c. when increased economies of scale provide major
departments, and every department has a functional competitive advantages,
strategy. Functional strategies are adopted to support a d. when competitors are faltering because the lack of
competitive strategy. management expertise

For example, a company following a low-cost Intensive strategies are those strategies, which demand
competitive strategy needs a production strategy that further more intensive efforts to improve the performance
emphasizes reducing the cost of operations and also a of existing products in the market. We may also said that
human resource strategy that emphasizes retaining the when an organization struggles to improve its competitive
lowest possible number of employees who are highly position with the current products then different types of
qualified to work for the organization. intensive strategies should be considered. Intensive efforts
are needed to employ when intensive strategies are
Other functional strategies such as marketing strategy, exercised by the organization. 
advertising strategy, and financial strategy are also to be
formulated appropriately to support the business-level Market Penetration is effective when:
competitive strategy. a. current markets are not saturated with the
particular products and services,
Operating strategy b. when the usage rate of present of present
customers can increased significantly,
Operating strategy is formulated at the operating units of c. when the market shares of major competitors have
an organization. A company may develop operating been declining while total industry sales have been
strategy, as an instance, for its factory, sates territory or increasing,
small sections within a department. d. when the increased economic of scales become
major competitive advantage.
Usually, the operating managers/field-level managers
develop an operating strategy to achieve immediate Product Development is effective when:
objectives. In large organizations, the operating managers a. new channels of distribution are available the
normally take assistance from the mid-level channels must be reliable, inexpensive, and good
managers while developing the operating strategy. quality;
b. when an organization is performing really well in
In some companies; managers “develop an operating the industry;
strategy for each set of annual objectives in the c. when new untapped and unsaturated markets
departments or divisions. found;
d. when an organization as excess production
Small company – Business Strategy is also part of the capacity.
Corporate Strategy
Market Development is effective when:
— Integration Strategy also called Management a. the successful product of the company reach its
Control Strategy. Integration strategies allow a firm to maturity stage on the product life cycle,
gain control over distributors, suppliers, and/or b. when an organization competes in an industry that
competitors. characterized by rapid technology development,
c. when the company’s competitors offering the
Forward integration is effective when: similar product but with better quality and
a. An organization’s present distributors are comparable prices
especially expensive, unreliable or incapable of
meeting the firm’s distribution needs. Diversification is a corporate strategy to enter into a new
b. The availability of quality distributors is so limited market or industry in which the business doesn't currently
as to offer a competitive advantage to those firms operate, while also creating a new product for that new
that integrate forward market.
c. An organization competes in an industry that is
growing and is expected to continue to grow Related diversification is effective when:
d. An organization has both the capital and human a. when an organization competes in a no-growth or
resources needed to manage the new business of a slow-growth industry,
distributing its own products b. when adding new, but related, products would
e. The advantage of stable production are particularly significantly enhance the sales of current products,
high c. when new, but related, products could be offered
f. Present distributors or retailers have high profit at highly competitive prices,
margin d. when an organization has a strong management
team
Backward integration is effective when:
a. The firm’s current suppliers are unreliable Unrelated diversification is effective when:
b. Costly and a. Revenues derived from an organization’s current
c. Cannot meet the firm’s demand products or service would increase significantly by
adding new unrelated products
 b. The organization competes in a highly competitive Focus strategy means producing products and services that
/ no growth industry as indicated by low industry fulfill the needs of small groups of consumers. Porters
profit margin and sales focus alternative strategies includes:
c. An organization’s present channels of distribution
can be used to market the new products of current Type 4 low cost focus strategy offers products or services
customers / competitors to a small range (niche group) of customers at the lowest
d. The new products have countercyclical sales price available on the market
patterns
Type 5 best value focus strategy offers product or service
An organization’s basic industry is experiencing declining to a small range of customers at the best price – value
annual sales and profits available on the market. (sometimes called focused
differentiation)
Defensive strategy is defined as a marketing tool that
helps companies to retain valuable customers that can be Why Joint Ventures Fails:
taken away by competitors. Competitors can be defined as a. Managers who must collaborate daily; not involve
other firms that are located in the same market category or in developing the venture
sell similar products to the same segment of people. b. Benefits the company not the customers
c. Not supported equally by both partners
Retrenchment (also called turnaround or reorganizational d. May begin to compete with one of the partners
strategy) is effective when: This strategy designed to
fortify an organization’s basic distinctive competence. Joint Venture/Partnering is effective when:
a. when an organization is one of the weaker a. Synergies between private and publicly held
competitors in a given industry, b. Domestic with foreign firm, local management can
b. when an organization is plagued by inefficiency, reduce risk
low profitability, and poor employee morale, c. Complementary distinctive competencies
c. when an organization has grown so large so d. Resources and risks where project is highly
quickly that major internal reorganization is profitable (e.g. Alaska pipeline)
needed. e. Two or more smaller firms competing w/ larger
firm
Divestiture is effective when: often used to raise capital f. Need to introduce new technology quickly
for further strategic acquisitions or investments.
a. An organization has pursued retrenchment Merger and acquisition is not desired by both parties, it is
b. A division needs more resources to be competitive a hostile takeover
c. A division is responsible for the firm’s overall
performance Reasons for M & A:
d. A division is a misfit with the rest of the a. Provide improved capacity utilization
organization which may result to different b. Better use of exiting sales force
markets, customers, managers, employees c. Reduce managerial staff
d. Gain economies of scale
Liquidation is effective when: can be an emotionally e. Smooth our seasonal trends in sales
difficult strategy and neither has been successful, f. Gain new technology
a. An organization has pursued both retrenchment g. Access to new suppliers, distributors, customers,
and divestiture products, creditors
b. An organization’s only alternative is bankruptcy
c. The stockholders can minimize their losses by Potential Advantages:
selling the organizations’ assets a. Securing access to rare resources
b. Gaining new knowledge of key factors & issues
Cost leadership emphasizes producing standardize c. Carving out market share
products at a very low per unit cost for consumers who are d. Easy to defend position & costly for rival firms to
price sensitive: overtake

Type 1 low cost strategy offers products or services to a Considered effective when:
wide range of customer at the lowest price available on the a. Build a firm’s image with buyers
market b. Produce cost advantages (new tech., distribution
channels, etc.)
Type 2 best value strategy offers products or services to a c. Create strong loyal customers
wide range of customer at the best price value available on
the market; the best value strategy aims to offer customer a Benefits of outsourcing:
range of product or service at the lowest price available a. it is less expensive,
compared to a rival’s products with similar attributes. b. allows the firm to focus on its core business,
Low price + value added features c. enables the firm to provide better services,

Type 3 Differentiation a strategy that seeks to build