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CHAPTER 5 - Coggle Diagram
CHAPTER 5
The Competitive Nature of Strategy
Competitive rivalry
Competitive analysis
MARKET COMMONALITY
is concerned with the number of markets which the firm and a competitor are jointly involved and the degree of importance of the individual markets to each.
RESOURCE SIMILARITY
is the extent to which the firm’s tangible and intangible resources are comparable to a competitor’s in terms of both type and amount.
Diversity of competitive actions and responses
COMPETITIVE
ACTIONS -
is a strategic or tactical action the firm takes to build or defend its competitive advantages or improve its market position
STRATEGIC ACTIONS / RESPONSES
is a market-based move that involves a significant commitment of organizational resources and is difficult to implement and reverse.
INTENSIVE STRATEGIES - Intensive growth strategies relating to products and markets. The intensive strategy focuses on increasing sales in various ways to increase the company's revenue
Market Penetration - is when a company works towards a higher market share by tapping into existing products in existing markets.
5 guidelines to implement market penetration
When current market are not saturated-If a market is unsaturated, the volume of a product or service still has plenty of room to grow. Companies often look for unsaturated markets in order to increase potential business.
When the usage rate of present customer can be increased b’cos market penetration relates to the no of potential customers that have purchased a specific company’s product instead of a competitor’s product. It is a measure of how much a product or service is being used by target customers compared to the total estimated market for that product or service.
The penetration pricing strategy involves offering a new product or service at a low initial price to gain customers' attention. The goal is to aggressively get customers in the door with low prices and gain market share.
When correlation between sales and marketing is high. Using intensive and focused effort can increase market share for the existing prod or services in the existing market
When total industry sales is increasing while market shares of major competitors is declining.
When increased economies of scale provide competitive advantage
Market Development - Introducing present products or services into new geographic areas.
Ways: market expansion to new continents, entering into a new geographical market, targeting new customers in new segment
6 guidelines to implement market development:
When new distribution channels are reliable, inexpensive and good quality
When organisation very successful in what it does.
When new untapped or unsaturated market exist.
When organisation has enough capital and HR to expand.
When organisation has excess production capacity.
When the industry becoming rapidly global.
Product Development - Seeks to increase sales by improving or modifying present products/services or developing new product.
e.g.: more features to the existing product / services.
5 guidelines to implement product development
When the products has reached maturity stage of the product life-cycle.
When rival firms offer better quality product at fair price.
When organization has strong R&D capabilities.
When organization competes in the industry that facing rapid technological
development.
When organization competes in high grow industry.
COMPETITORS - are firms operating in the same market, offering similar products, and targeting similar customers
COMPETITIVE RIVALRY -is the ongoing set of competitive actions and competitive responses occurring between competitors as they compete against each other for an advantageous market position.