Two important drivers shape the best strategic options for a company.
The nature of the industry and competitive conditions.
The resources and competitive capacities of the company itself, its market position and its opportunities.
The dominant conditions that shape the strategies of the Ind. And the competitive conditions revolve around which stage of its life cycle it is, of its structure. Of the relative strength of the five competitive forces, of the effect of the driving forces of the Ind., And of the sphere of action of competitive rivalry.
The specific fundamental considerations of the company are:
Whether the company is an industry leader, a promising company, or a loser struggling to survive
The company's set of strengths and weaknesses, competitive capacities and market opportunities
Strategy can be equated with the situation, considering the strategy design challenges that exist in six classic types of industry environment.
Competition in emerging and fast growing industries.
Competition in high speed markets.
Competition in the industry that are maturing.
Competition in paralyzed or declining industries.
Competition in fragmented industries.
Competition in international markets.
And in three types of company situation classics;
Companies in industry leading positions.
Companies in second place.
Companies that are weak competitive or that are overwhelmed by a crisis.
Strategies to compete in emerging industries
An Emerging Ind. Is one that is in the first stage of formation.
Two strategic problems that companies face are;
How to finance startup and initial operations until sales begin.
What segment of the market and what competitive advantages should they seek when trying to achieve a leading position.
To have success. Companies generally must follow one or more of the following routes.
- Try to win the first race for leadership in the Ind. With a bold entrepreneurial attitude and creative strategy. They typically offer the best opportunity for a first competitive advantage. Press to refine technology, improve product quality, and develop attractive performance characteristics. As technological uncertainty clears and a dominant technology emerges, adopt it immediately. form strategic alliances with key suppliers in order to gain access to specialized capabilities, technology, and critical materials or components.Try to retain any of the first-step advantages, capturing the effects of the experience curve and taking good ownership. in new distribution channels. Search for new customer groups,new user applications, and entering new geographic areas. Making it easier and cheaper for first-time buyers to try out the first generation of Ind products. Using price reductions to appeal to the next price-sensitive shopper tier..To anticipate the entrance of external companies well established and with aggressive strategies as the sales of the Ind begin to increase. And the perceived risk of investing in it decreases.Anticipate the entry of well-established external companies with aggressive strategies as sales of the Ind begin to increase. And the perceived risk of investing in it decreases.Anticipate the entry of well-established external companies with aggressive strategies as sales of the Ind begin to increase. And the perceived risk of investing in it decreases.
Strategies to compete in high speed markets
High speed is the prevailing condition in microelectronics, hardware and software for personal computers, telecommunications, internet cyberspace or internal company networks, as well as healthcare.
Competitive success in fast-changing markets tends to depend on incorporating the following elements into the company's strategies:
- Invest aggressively in research and development to stay current on technological insights. Develop organizational capacity to respond quickly to new important developments. Trust strategic partnerships with external suppliers and companies that manufacture related products to perform those tasks. activities in the total value chain of the industry where they have specialized experiences and capabilities.
In-depth markets, in-depth experience, speed, agility, innovation, opportunism, and resource flexibility are critical organizational capabilities.
Strategies to compete in industries that are maturing
The transition to the slower growing environment in a maturing industry does not start with easily predictable bread, and the transition can be anticipated through additional technological advancements, product innovations, or other driving forces that rejuvenate the demand for marking.
- the slowing growth of buyer demand generates more direct competition for market share. Buyers are becoming increasingly sophisticated, often imposing more difficult bargaining on the purchasing sequence. Competition often produces greater emphasis on cost and service. Companies have a “surplus” problem when they increase their production capacity. It is more difficult to find product innovation and new applications for their final use. It increases to international competition The profitability of the industry decreases early or permanently Competition More severe leads to mergers and acquisitions among former competitors, expels weaker companies from the industry, and generally produces industry consolidation.
As the new competitive nature of the maturity of the industry begins to take hold, several strategic measures emerge that companies can initiate in order to strengthen their competitive positions.
- Reporting on the product line Greater emphasis on the lines of process innovations Increasing sales to current customers Buying from rival companies at a bargain price International atonement Developing new or more flexible capabilities
One of the biggest mistakes a company can make in a maturing industry is to seek compromise between low cost, difference, and focus, ending with a confusing strategy, a poorly defined market identity, no competitive advantage, and too few prospects to become a leader.
Strategies for companies in stagnant or declining industries
Stagnant demand alone is not enough to make an industry unattractive. The sale of the company may or may not be practical and closing operations is always a last resort.
The strongest competitors may perhaps take away the advantages from the weaker rivals and the acquisition or exit of weaker companies creates opportunities for the remaining companies to gain a greater market share.
In general, stagnant companies can use one of the following three strategic themes.
- Seek a focus strategy identifying, creating and exploiting the growing segments within the industry. Emphasize differentiation based on quality improvement and product innovation. Work diligently and persistently to lower costs.
Strategies to compete in fragmented industries
The outstanding competitive feature of a fragmented industry is the absence of market leaders with very large shares or with broad buyer recognition.
A focus on a well-defined market niche or on a buyer segment typically offers more potential for competitive advantage than striving for broader market appeal. Suitable options in a fragmented industry include:
- construction and operation of "formula" facilities Become a low cost operator. Increase value for the customer through integration. Specialization by product type. Specialization by customer type. Focus on a limited geographic area.
In fragmented industries, competitors typically enjoy broad strategic freedom to; compete broadly or focus and seek a competitive advantage based on either low cost or differentiation.
Strategies to compete in international markets
Companies are motivated to expand into international markets for any of the following reasons:
- Search for new customers for your products or services. A competitive need to achieve lower costs. Take advantage of the strengths of your skills and resources. Obtain valuable deposits of natural resources in other countries. Share your business risk along a market base. more espacious.
There are four considerations about situations that are unique to international operations: cost variations between countries, fluctuating exchange rates, host government trade policies, and pattern of international competition.
Strategies for Industry Leaders
Leaders are well known and those who are remarkably entrenched have proven strategies.
A leader's main strategic concern revolves around how to maintain a leadership position, perhaps becoming the dominant leader as opposed to a leader.
There are three contrasting strategic positions that are being opened up for industry leaders and dominant companies:
- strategy to stay on the offensive strategy to strengthen and defend themselves strategy to follow the leader
Strategies for Second-Place Businesses
A company that ranks second can seldom successfully challenge a leader through an imitation strategy.
When the effects of economies of scale are small and greater market share does not produce a cost advantage, the companies in second place have more strategic flexibility and can consider any of the following six approaches:
- Vacancy niche strategies Specialist strategy Product superiority strategy Satisfied follower strategy Growth strategy through acquisition Strategy of distinctive image
Strategies for weak businesses
Strategic options for a competitively weak company include launching a modest offensive to improve its position, defend it, be acquired by another company, or employ a harvest strategy.
Thirteen principles to devise successful business strategies
- Assign top priority to the design and execution of strategic measures that enhance the company's long-term competitive position Understand that a clear and consistent competitive strategy, when well designed and executed, creates a reputation and a distinctive position in the industry; a frequently changing strategy aimed at capturing momentary market opportunities. Avoid “get caught in the middle” strategies that represent compromises between lower costs and greater differentiation, and between broad and limited market appeal. Investing in creating a sustainable competitive advantage. Implement an aggressive offensive to create a competitive advantage and an aggressive defense to protect it. Avoid strategies that can only succeed in the most optimistic circumstances.Being cautious in the search for a rigid or inflexible strategy that locks the company in the long term, inflexible strategies may become obsolete due to changing market conditions. Do not underestimate the reactions and commitment of rival companies. Avoid the attack on Capable and skillful rivals without having a solid competitive advantage and broad financial strength. Consider that attacking competitive weaknesses is usually more profitable and less risky than attacking competitive strengths. Be sensible in reducing prices if not There is an established cost advantage. Be aware that aggressive measures to take away rivals from their market share often lead to retaliation in the form of a marketing "arms race" and price wars,Strive to open very significant gaps in quality, service or performance characteristics when seeking a differentiation strategy.
