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6. Strategic choices (I)

Corporate Strategy Master Degree
The Faculty of International Business and Economics,
ASE Bucharest

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Detailed Course Contents:

1. Introducing Strategy
2. The Strategic Position The Environment; Strategic
Capability; Expectations & Purposes

3. Strategic choices - Business-Level; Corporate-Level and

International Strategy; Directions and Methods of
Development

4. Strategy into action Organising for Success; Enabling

Success & Managing Strategic Chance

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Strategic choices (I)

Business-Level Strategy

Business level strategies

Bases of competitive advantage the strategy clock
Sustaining competitive advantage
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

AGENDA for TODAY

6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

AGENDA for TODAY

6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

Business level strategies

Bases of competition

Achieving competitive
Advantage

Price
Differentiation
Hybrid
Focus

Sustainability
Hyper competition
Collaboration

SBU
strategies

Detailed choice
Directions
Methods

LEARN. PERFORM. GROW.

AGENDA for TODAY

6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

Bases of competitive advantage the Strategy Clock*

4 Differentiation

High

5 Focused
Focused
differentiation
differentiation

Perceived product/ service benefits

3
Hybrid

* addapted from the

2
Low price

work of Cliff
Bowman

7
1
No frills

Low

Price

Strategies destinated
for ultimate failure
High

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The Strategy Clock - competitive strategy options

1 No frills

Likely to be segment specific

2 Low price

Risk of price war and low margins; need to be cost

leader

3 Hybrid

Low cost base and reinvestment in low price and

differentiation

4 Differentiation
(a) without price premium
(b) with price premium

Perceived added value by user, yielding market share

benefits
Perceive added value sufficient to bear price premium

5 Focused differentiation

Perceived added value to a particular segment,

warranting price premium

6 Increased price / standard

value

Higher margins if competitors do not follow; risk of

losing market share

7 Increased price / low value

Only feasible in monopoly situation

8 Low value / standard price

Loss of market share

Likely failure Differentiation

NEEDS / RISKS

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AGENDA for TODAY

6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

Sustaining competitive advantage

Price-based strategies

Differentiation

Accept reduced margin

Create difficulties of imitation

Win a price war

Reduce costs
Focus on specific segments

Achieve imperfect mobility

(of resources / competences)
Reinvest margin

Sustaining
competitive
advantage

Lock in
Achieve size / market dominance
First mover advantage
Reinforcement
Rigorous enforcement

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Three GENERIC strategies (Porter 1980)

STRATE G I C AD VANTAG E

STRATE G I C TAR G ET

Uniqueness Perceived
by the Customer

Industry
wide

Particular
Segment
Only

Low Cost Position

OVERALL

DIFFERENTIATION

COST LEADERSHIP

FOCUS

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Overall cost leadership

Commonly Required Skills and
Resources

Sustained capital investment and

access to capital

Process engineering skills

Intense supervision of labour

Common Organizational
Requirements

Tight cost control

Frequent, detailed control reports

Structured organization and
responsibilities

Products designed for ease in

Incentives based on meeting strict

manufacture

quantitative targets

Low-cost distribution system

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Differentiation
Commonly Required Skills and
Resources

Strong marketing abilities

Product engineering
Creative flair
Strong capability in basic research
Corporate reputation for quality or
technological leadership

Long tradition in the industry or unique

combination of skills drawn from other
businesses

Strong cooperation from channels

Common Organizational Requirements

Strong coordination among functions in

R&D, product development and marketing

Subjective measurement and incentives

instead of quantitative measures

Amenities to attract highly skilled labour,

scientists or creative people

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Focus
Commonly Required Skills and
Resources

Common Organizational Requirements

combination of the previous policies (in the case of the overall cost
leadership and differentiation generic strategies) directed at the particular
strategic target

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AGENDA for TODAY

6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

Competitive strategy in hypercompetitive conditions

Repositioning
Overcoming
Competitors
barriers
Shorter life cycles
Undermine
strongholds
Counter deep
pocket advantages

Competing
successfully

Competitive
strategies in
hypercompetitive
conditions

Overcoming competitors
market-based moves
Block first-mover advantages
Imitate product/market moves

Pre-empt competition
(new strategies)
Do not attack
competitor's
weaknesses
Disrupt the market
Be unpredictable
Mislead competitors

LEARN. PERFORM. GROW.

AGENDA for TODAY

Course 6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

Competition and collaboration

Increased
selling power
Stakeholder
expectations

Shared work
with customer

Entry to
new markets

Increased
buying power

Competitiveness
might be improved
by collaborating
to achieve

Increased
barriers to entry

Decreased risk
of substitution

LEARN. PERFORM. GROW.

AGENDA for TODAY

6. Strategic choices (I)
- Business-Level Strategy

Business level strategies

Sustaining competitive advantage

Bases of competitive advantage the strategy

clock
Competitive strategy in hypercompetitive conditions
Competition and collaboration

LEARN. PERFORM. GROW.

Thank you!

For more information:

Cosmin Jolde
cosmin.joldes@achieveglobal.ro