Cost, Focus & Preemptive move.

A.Low cost strategies.

1.No – frills product / service.
○Remove all frills & extras from a product or service.
○Risk in service sector, competitors will add few
features & position themselves.
The goal is to generate a no. frill cost
○
advantage that is sustainable for one of two
reasons.
○Competitors cannot easily stop offering services that
their customers expect.
○Competitors operations & facilities have been
designed for such services & cannot be easily changed.
 2.Product design.
○Product design or composition can create cost
advantage.
○Augment a product with relatively high margin
accessories.
○Product downsizing.

3.Operations.
○To obtain significant operational economics i.e.
access to raw material, low cost distribution, cost of labor,
government subsidies, location cost, innovation,
automation, purchase of inexpensive capital equipment &
reduction of overhead.
 4.Scale economies.
○To determine the optimal size for an operation.
○Scale economies may be in wobble in case company
has multiple product or brand unit.

5.Experience curve.
○Learning.
○Technological improvement in production / operations.
○Product redesign.
● Issues to be addressed.
● Multiple products can complicate the situation.
● Experience curve is not automatic, it must be proactively
managed.
● Technology or market change may affect experience
curve to become obsolete.
● Cost reduction should be translated into low prices &
higher shore.

● Low cost culture.

 B.Focus strategy.
A focus strategy, whethere it involves
differentiation, low cost or both, concentrates on
one part of the market or product line. Focus
strategies avoid diluting or distocting strategy
implementation, provide a way to compete when
resources are limited, by pass assets &
competencies of larger competitors, provide
positioning strategy & reduce competitive
pressures.
○ It avoids strategy dilution or distraction hence more likely
to have sustainable advantage.
○ It helps to create needed impact with limited resources.
○ A strategy provides the potential to bypass competitor’s
assets & competencies.
○ A focused strategy may also provide a positioning
device.
○ The payoff of small niche may be less than that of large
growing market, the competitor may often also be less
intense.
● Focusing the product line.
● Targeting a segment.
● Limited geographic area.
 C.The preemptive move.
A preemptive strategic move is an
implementation of strategy new to a business area
that, because it is first generates an asset or
competency that competitors are unable to
duplicate or counter.

●Sources of preemptive opportunities.

1.Products.
○Preempt a position.
○Develop a dominant design.
○Secure superior product – development personnel.
 2.Production system.
○Develop production processes.
○Expand capacity.
○Vertically integrate.

3.Customers.
○Train customers in usage skill – become the familiar
brand.
○Get customers to make long term commitment.
○Gain specialized knowledge about a customer.

4.Distribution & service system.

○Occupy prime locations.
○Dominate key distributors or antlets.
● Implementing the preemptive move.
● Innovation is required.
● Substantial commitment of resources.
● Successful first – mover advantage assurness that a
competitor will be preemptedd from duplicating or
countering.