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8.2 - Choosing How To Compete (Bowman's Strategic Clock…
8.2 - Choosing How To Compete
Porter's Generic Strategies
A firms profitability is determined by their ability to keep a competitive advantage in the long run
Cost Leadership
Low input costs
Own suppliers - Avoids supplier profit margins
Physical distance from suppliers - Reduce transport costs
Economies of scale
Bigger than rivals - Spread fixed costs over more units
Experience
Managers with more experience could source cheaper materials
More efficient decisions
Product/process design
May be more cost efficient than rivals
Differentiation
Business provides a degree of uniqueness
If the higher price charged exceeds the extra costs, a business will have higher returns than competitors
Focus
Adopts either cost leadership or differentiation but for a narrow (niche) market
Most firms adopting a focus strategy will use differentiation.
Bowman's Strategic Clock
Differentiating without a price premium
(12 O'clock)
Differentiating with a price premium
(1 O'clock)
Focused differentiation
(2 O'clock)
Low-price strategy
(8 - 9 O'clock)
No frills strategy
(7 O'clock)
Hybrid strategies
(9 - 12 O'clock)
Ansoff's Matrix
Market Penetration
Existing Product
Existing Market
Least Risk
Market Development
Existing Product
New Market
Medium Risk
Product Development
New Product
Existing Market
Medium Risk
Diversification
New Product
New Market
High Risk