2. Need for a strategy/strategies
• No single strategy is the best in all
situations and at all times
• Avoid casual bench marking by aligning
your strategic choices to your situation
• We need a consistent set of
choices/decisions and actions/tactics in
order to outwit our rivals
• Without this consistent set of tactics,
synergy is lost
3. Selecting the best strategy thatSelecting the best strategy that
will enable a firm achieve itswill enable a firm achieve its
goals.goals.
Some strategy options areSome strategy options are
more appropriate than others.more appropriate than others.
Strategists should evaluate theStrategists should evaluate the
existing alternatives beforeexisting alternatives before
choosing the best strategychoosing the best strategy
4. Criteria for evaluation and selection of
strategy
• Sustainable competitive
advantage
• Corporate goals &
objectives
• Organization policies and
culture
5. • Ethical issues
• Cost of strategy failure
• Feasibility of the
strategy
6. The Generic Strategy
Alternatives.
Are the common strategic
approaches that can give a firm
sustainable competitive advantage.
Michael Porter’s approach
Igor Ansoff’s approach
Glueck’s approach
Kotler’s approach
Tailor-made strategies
8. 1.Overall cost
leadership:• Aim at being the lowest
cost producer relative to
competitors
• Increases a firm’s
profitability
• The market can enjoy
affordable prices
9. Making oneself differentMaking oneself different
from othersfrom others
Adding to customersAdding to customers
perceived value of the firmperceived value of the firm
and its productsand its products
Calls for continuousCalls for continuous
innovations (customer-innovations (customer-
centred)centred)
2. Differentiation2. Differentiation
strategy:strategy:
10. How can a firm differentiateHow can a firm differentiate
Image buildingImage building
High quality and distinctiveHigh quality and distinctive
productsproducts
Superior customerSuperior customer
servicesservices
Unique design andUnique design and
packagingpackaging
Convenient terms toConvenient terms to
11. 3. Focus strategy3. Focus strategy
Involves segmenting theInvolves segmenting the
marketmarket
Focusing on a given marketFocusing on a given market
segmentsegment
Calls for specialization in aCalls for specialization in a
specific market segmentspecific market segment
(niche marketing)(niche marketing)
12. Why focus strategy?Why focus strategy?
Different groups of buyers withDifferent groups of buyers with
different needsdifferent needs
No other rival is attempting toNo other rival is attempting to
specialize in the same segmentspecialize in the same segment
A firm’s resources don’t allow itA firm’s resources don’t allow it
to spread over the entireto spread over the entire
segmentsegment
Where some segments are moreWhere some segments are more
attractive than othersattractive than others
13. ANSOFF’S
APPROACH
Provides four strategic
approaches based on
product and market
information
Came up with the
product/market matrix.
15. Existing Products-Existing MarketsExisting Products-Existing Markets
1.1. Divestiture-It has reached maturity/you need moneyDivestiture-It has reached maturity/you need money
for other ventures/in order to concentrate on yourfor other ventures/in order to concentrate on your
core or more beneficial businesscore or more beneficial business
2.2. Consolidation-You are enjoying a comfort zone/needConsolidation-You are enjoying a comfort zone/need
to go back to the basic (status quo)to go back to the basic (status quo)
3.3. Retrenchment-You have over expanded orRetrenchment-You have over expanded or
diversified ,you need to reduce your operating costs;diversified ,you need to reduce your operating costs;
sell part of the businesssell part of the business
4.4. Market penetration-Enter new markets with a moreMarket penetration-Enter new markets with a more
attractive offer/buy out your close rival through sayattractive offer/buy out your close rival through say
an acquisition/use a strategic alliancean acquisition/use a strategic alliance
16. New products-Existing marketsNew products-Existing markets
No or less resources needed to develop theNo or less resources needed to develop the
marketmarket
You need to develop a new product or modifyYou need to develop a new product or modify
the current one for that marketthe current one for that market
A product development strategy is the bestA product development strategy is the best
strategy; refer to PLC as you craft this strategystrategy; refer to PLC as you craft this strategy
Bench-mark this generic strategy and fine tune itBench-mark this generic strategy and fine tune it
your competitive situationyour competitive situation
17. Existing products-New marketsExisting products-New markets
No or less resources needed to develop theNo or less resources needed to develop the
productproduct
You need to develop the new market for yourYou need to develop the new market for your
product (s)product (s)
A market development strategy is needed usingA market development strategy is needed using
say; CRM tactics/customer care practices/takingsay; CRM tactics/customer care practices/taking
your products (services) near your customersyour products (services) near your customers
Refer to the current stage in the marketing cycleRefer to the current stage in the marketing cycle
as you fine tune this generic strategyas you fine tune this generic strategy
18. New product-New marketNew product-New market
A lot of risks and uncertainties involved; youA lot of risks and uncertainties involved; you
need to develop the new product for the newneed to develop the new product for the new
marketmarket
Minimize such risks through using a competitiveMinimize such risks through using a competitive
stepping stonestepping stone
Commonly used strategies in such situationsCommonly used strategies in such situations
include; buying franchises, strategic alliances, andinclude; buying franchises, strategic alliances, and
use of pilot projects among othersuse of pilot projects among others
20. Stability Strategies:
• Strategies pursued with no
or few changes made in
the firm’s products,
markets or functions.
• Ideal for those firms that
are already consolidated
in the market.
21. Why stabilize?
The strategy is less risky
When a firm is doing well
Executives aren't creative
and innovative
Fear to disrupt routines
Environment is relatively
stable
Fear of inefficiencies due to
22. Expansion Strategies
A firm serves the market with
additional offers, adds to its
markets and functions.
Firm increases the pace of its
activities
Ideal where a firm wants to
improve its growth
performance
23. Why Expand?
To survive in a volatile
environment
To provide variety to the
market
Sign of good performance
Need to re-invest profits
To enjoy economies of scale
Motivates the firm
24. Retrenchment strategies:
A firm reduces its product lines,
abandons some market territories,
reduces its functions.
Looks like lean management
Firm reduces activities in those
units with negative or little cash
flows.
The pace of operation and scope
of activities greatly reduces.
25. Why retrench?
• The firm is performing poorly
• The firm has tried all strategies and
still failed to succeed
• The firm needs funds to pursue
better opportunities elsewhere
• Turbulent environment
• External pressure
27. Kotler’s strategies.
• Looks at market positions (shares) of
competing firms
• The competitors are at war over these
competitive positions
• Different competitive positions require different
competitive strategies
• The positions include; market leader,
challenger, follower, and nicher mainly
28. Market leader’s strategies
• Those you lead also want to get where you
are and/or even overtake you; you are the
target for the challenger’s strategic attacks
• Use strategies that may help you to expand
or protect your market share
• The best science and art of war/the general
(strategy) depends on your situation at hand
in your internal and external environment
29. a) Expanding your total market
1. Acquisitions and mergers
2. Franchises and/or international trade
3. Increase usage of your products
4. Finding new users/creating new
demand
30. Protecting your market share
(strategies involved)
1. Defending your leading position and
competitive business walls
2. Pro-reactive protection of your weak
flanks/Pre-emptive defending
3. Counter offensive defense
4. Enter new markets for future defense
5. Strategic withdrawal
32. Market Challengers’ strategies
• They want to overtake the share leaders
BUT should also aggressively differentiate
themselves from fellow challengers using
the following alternatives;
1. Frontal/head-on/direct attack (strengths)
2. Flanking/indirect attack ( weak points)
3. By pass/ Leapfrogging
4. Encirclement/Guerrilla attack
33. Note
• The market leader is usually better than you in
terms of resources/expertise
• They are also watching your attacking activities and
looking for strategies of how to deal with your
challenge
• Some market share leaders’ reactions may shallow
the attacker/challenger
• To improve your market share, you need to build a
distinctive competitive advantage of your own; not
just imitating your market leader
35. Market followers' strategies
• Sometimes overlooked by the market
leader and challenger BUT may become
challenger and/or even overtake the
market share leader
• Their commonly used strategies;
1. Cloner
2. Imitator
3. Adaptor
36. Market Followers-cont
• Commonly found in oligopolistic
industries
• Try to compete on dimensions other than
price (avoid price competition)
– Product value/quality
– Customer service
– Promotional effectiveness
– Distribution, etc
37. Market nichers
• Operate on high profit margins vs. high
volume
• Compete in well-defined market segments
(niches)
• They tend to specialize in that niche in
terms of customer category,
products/services, geographical area
• Successful nichers usually have a large
38. How to select a few from the
many generic/bench-marked
strategies
• The common approaches;
1. The strategic choice matrix
2. SWOT analysis
3. Portfolio analysis
39. Factors determining the final
acceptance of the proposed
strategy by top management
1. Top management’s attitude towards risk
2. Top executives’ preference for past strategy in
relation to past performance
3. Their values including the shared values,
chief executive's beliefs and personal
intentions
4. CEO’s power relationship with other top
executives and surdodinates
