考文垂大学商科课程企业财务战略第九讲ppt课件.ppt

M15EFACFS FINANCIALSTRATEGICCHOICEATBUSINESSLEVELSTRATEGY GENERICSTRATEGIES ETC SESSIONOBJECTIVES tooutlineandcriticallyappraisePorter sgenericstrategies UnderstandtheconceptofBowman sstrategicclockandapplythemodeltobusinesseswhereappropriateExplainandanalysethevariousbasesofachievingfinancialandcompetitiveadvantageintermsof routes onthestrategyclockandPorter sgenericstrategies Porter sGenericStrategies ThreepossiblestrategiesLowcostDifferentiationFocus Differentiation DifferentiationFocus CostLeadership CostFocus BroadTarget LowCost Differentiation NarrowTarget Porter sGenericStrategies COMPETITIVEADVANTAGE COMPETITIVESCOPE SelectingaCostBasedStrategy 1 Iftherearesignificantscaleandlearningeconomiesandnootherfirmisexploitingthem 2 Ifopportunitiesforenhancingtheproduct sperceivedbenefitsarelimitedbythenatureoftheproduct 3 Ifconsumersareprice sensitiveandunwillingtopayapremiumforextraquality 4 Iftheproductisasearchgoodratherthananexperiencegood SelectingaDifferentiationStrategy Seekingbenefit advantagesordifferentiationislikelytobemostprofitableinbusinesseswithhighhorizontaldifferentiation lowP E D priceelasticityofdemand andhighmargins Differentiationstrategiesaremostlikelytobechosenwhen 1 consumersarethoughttobewillingtopayapricepremium2 otherfirmsarealreadyexploitingscaleandlearningeconomies3 theproductsarecategorisedasexperiencegoods FocusStrategies 1 Productspecialisation2 Geographicspecialisation3 Customerspecialisation4 Nichestrategy StuckintheMiddle Porter spositionisthatfirmswhoproducebothdifferentiationandlowcoststrategiessimultaneouslyarenotsuccessful relativelylessbenefitandhighercostscomparedtothosefirmswhoarehaveaclearlyfocusedstrategyononeortheother e g theoldBritishLeylandAreflectionofthetrade offbetweenqualityandcosts Canfirmsachievebothlowcostanddifferentiation 1 Firmsthatofferhighqualityproductsmayachievehighermarketshareandthereforeachievelowercostsofproduction 2 Therateatwhichaccumulatedexperiencereducescostsisgreaterforhigher qualityproducts 3 Theexistenceof X Inefficiencies muddletherelationshipbetweencostanddifferentiationposition 4 Consumersmaynotbegroupedateitherendofthepolarcontinuumandactuallypreferafirmwhichproducesamid range midpriceproduct CritiqueofPorter sgenericstrategies 1 Arethestrategiessufficientlygenericoraretheyonlyapplicabletocertainfirms Inreality dofirmsactuallyhaveadiscretechoice 2 Hasmoderntechnologyresultedinfirmsbeingabletoproducehighqualityproductsatlowcost 3 Arecertainstrategiesonlyapplicableundercertainenvironmentalconditionse g productdifferentiationinenvironmentscharacterisedbyhighvolatility 4 Thefirm sorganisationalstructuremayrestrictthechoiceofstrategyi e notallgenericstrategiescanbeimplemented implementationismoredifficulttoachievethanstrategicchoice 5 Themoredifferentiatedafirm thegreaterthelegitimacychallengeswhichmayhinderresourceacquisitionandreduceperformance Thereisaparadoxbetweendifferentiationandconformity 6 Dogenericstrategiesencourageprescriptiveresponsesattheexpenseofvisionandcreativity CritiqueofPorter sgenericstrategies cont d BasesofSBUstrategy CompatibilityneededbetweenCorporate SBULevelStrategyBasesofstrategicchoiceatSBUlevel AchievingandSustainingCompetitiveAdvantageCompetitiveStrategy ThebasisonwhichaSBUmightachievecompetitiveadvantageinitsmarkets JSW 2005 p242 GenericStrategies CompetitiveAdvantageachievedbygivingcustomerswhattheywantorneedbetterormoreeffectivelythancompetitors andinwaysthatcompetitorsfinddifficulttoimitate Porter 1980 UsinginBowman sterminology 1 Price basedstrategies lowerprices associatedwithhavinglowCOSTbase 2 Differentiationstrategies product serviceprovidesbetteraddedvaluethancompetitors3 Focusstrategies Applyingoneoftheabovetoaparticularmarketsegment Bowman sStrategyClock Exh 5 2 p243 JSW 2005 2 4 5 3 1 8 7 6 Differentiation Focuseddifferentiation Hybrid LowPrice Nofrills High Low Low High PERCEIVEDADDEDVALUE PRICE Strategiesdestinedforultimatefailure TheStrategyClock Exhibit5 2 JSW 2005 Route1 NoFrills LowPrice LowAddedValueLowpricemakesproduct serviceattractiveORCustomercan taffordhigherpricedalternativesSo pricesensitive segmentrequiredCostbaselowaspossible tosupportlowpriceOnlysustainableifcompetitorsunabletomatchlowcostbaseeg Aldi Nettosupermarkets Route2 LowPriceAimtoselltobroadrangeofcustomersatlowerpricesthancompetitorsSimilarlevelofperceivedqualitySo sourcesof costadvantage mustbeexploitedRisk Competitorsseektomatchpricecuts pricewars Strategyonlysustainableifsourcesofcostadvantagecanbeexploited protectedeg Asda Route3 HybridPorter Choosebetweenlowcostanddifferentiation avoid stuckinthemiddle BUTmanyco ssuccessfullyofferhigherperceivedqualityatlowerprices hybrid How Sellinginsufficientvolumetoexploitcostadvantagesbalancedwith Investmentinbasesofdifferentiation creatingperceivedaddedvalueaswellasloweringpriceseg Tesco Route4 Differentiation higherperceivedadded value Attractsbroadrangeofcustomerswithfeaturestheyvalueotherthanlowerpriceseg productrange quality reliabilityDependsonoffering something different tocompetitorsthatis valued bycustomers ANDdifficultforcompetitorstocopyeg Sainsbury s Route5 DifferentiationFocusHigherperceivedvalueatsubstantialpricepremiumAimedatparticularmarketsegmentSegmentmustnotbewellservedbycompetitors sustainabilitydependsonunwillingnessofcustomerstobuyfromelsewhereeg HarrodsFoodHall Fortnum MasonProvidehighqualitygroceriesathighpricepremiumto exclusive segmentofmarket FailureStrategies Routes6 7 8 Whyisfailureinevitable Onlyinrarecircumstances e g monopolies canyou raisepriceswithoutimprovingperceivedqualityOR reduceperceivedqualitywhilstmaintainingorraisingpriceBecause Customerswillgoelsewhere orNewcompaniesfollowingdifferentapproacheswillentermarket high threatofentry Pointstorememb