MASTER OF BUSINESS ADMINISTRATION (MBA) CASE STUDY-LECTURE NOTES COMPETITIVE STRATEGIES 1.

Competitive strategies in newly established markets Restrict commitment of resources to specialized uses. Limit the level of fixed costs in the organization. Spend time becoming street-wise. It is important to have an ear close to the ground when market conditions are so volatile. That is, sensitive to the market conditions and trends. Scan technology alternatives - Technology can be utilized effectively in several different aspects of an organizations operations varying form administration, to information processing, to operations management. Competitive strategies in consolidating markets During this phase the boundaries of the market become apparent and specific segments begin to appear. Resist haphazard growth. Focus on finding the key success factors in the industry and the associated means of achieving sustainable competitive advantage within this growth area. Focus on the internal value chain - Methods, procedures, polices and rules are ad hoc and informal at best. At this stage, therefore, it is important to refocus on internal efficiency and to organize the elements of the value chain in such a way that they become an integral part of the competitive strategy. Perform some blue skies planning (Long-term Planning). To establish a vision of the industry and its prospects, they will have a much better idea of where the organization should go in the future and how it should get there. Competitive strategies in growth markets At this stage, it is usually quite clear what customer requirements are and the technology associated with the industry is well known. The critical factor, therefore, becomes the extent to which an organization can outperform its competitors using the known technology to satisfy customer needs. It is important for management to be aware of the likelihood of new competitors entering the market, of substitute products being developed, and of the changing nature of the industry itself as it approaches maturity. Strategies Build market share to dominate a major segment of the market. During this phase, competitors are enjoying increasing sales levels and many cannot cope with the level of demand for their products. Under these conditions, their own prosperity makes them less concerned about conceding market share to their more effective rivals. So, provided the necessary skills and resources, market share is there for the taking by growth minded competitors. Look for developing market segments. Apart from obvious core segments, exploring new segments can provide a convenient target for organization seeking to grow at a faster rate than the industry average.
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Dr P.R.Datta

Reorganize distribution channels. Distribution channels must be carefully selected in the anticipation of the mass-marketing strategy required in the forthcoming maturity stage. Lock in supplier. By supporting and locking in the right suppliers at this early stage of industry development, an organization can develop a strong and sustainable competitive advantage. Select target competitors. An organization needs to identify which of those competitors are pursuing similar strategies to its own and to design specific marketing, financial, operations and human resources activities that will ensure that its value chain is more effective than those of its competitors.

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Competitive strategies in mature markets The most obvious identifying characteristic of industry maturity is a slowing of demand to such an extent that competitive rivalry is affected. As a result of the intensive competition for customers and relative increase of supply over demand, the buyer power is enhanced, and customers use this power to drive down prices or to demand extra performance in terms of product quality, features or servicing. During industry maturity, it is imperative that the organization identifies and adheres to a specific generic strategy. Strategies Rationalize Operations - By reducing costs through product stripping, pruning unprofitable products from the product line, withdrawing from unprofitable market segments, and focusing on creating efficiency in all aspects of the value chain, it is possible to ensure that profit margins remain high. Product Rejuvenation - By matching product characteristics more closely to customer requirements and by focusing more tightly on growth segments, it is possible to maintain profit margins and to carve out a viable niche in the industry. Hold Market Share - During industry maturity, as competition increases, it is unwise to embark on a market share gaining strategy. Even if the organization has survived industry maturity well and is cash rich, these funds can be more profitably spent elsewhere than by attempting to take market share form competitors who are now jealously guarding every sale they make. Vertical Integration - If diversification is seen as being too risky, management may wish to attempt to turn cost centers into profit centers by embarking on backward or forward vertical integration. International Strategy - As the local competitive situation worsens, many organizations should consider repeating their previously successful strategies in a foreign market. Competitive strategies in declining markets For many years, the only solution to a declining market is to pursue a harvesting strategy and then leave the industry altogether. However, it get drawbacks including: This strategy is of little value to organizations with single business. It does little for morale of management and staff. In a declining market, the organization cannot sell their assets at any price. It is first necessary for management to clearly identify the reason behind the decline in the industry. Strategies
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Dr P.R.Datta

Become the market leader - This strategy is based on the assumption that the market leader will have a lower cost structure due to the experience curve and economies of scale, and will be able to dominate the market, causing other smaller competitors to withdraw. As long as the market is viable enough to support one large competitor, such a strategy is feasible. Find a profitable segment - If it is not possible to dominate the market, the organization should seek a segment of the market that holds greater prospects than the rest. Given that all markets can be segmented in a prospects than the rest. Given that all markets can segment in a variety of ways, a new and creative approach to the market may hold the key to the continued survival and success of the organization. Note: With both of these strategies, it is important for an organization not to become too dependent on one customer.

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Competitive strategies in global industries A global organization is usually defined as one whose operations in different countries are systematically integrated for the purpose of gaining competitive advantage on a global basis. The global approach to strategy is becoming critical in industries that sell a standardized product in many different countries. The strategy requires an organization to take advantage of the relative strengths and opportunities presented in each country to contribute to the overall value chain.

Dr P.R.Datta

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