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Game

Buyer Power

Supplier PowerCompetitive RivalryThreat of SubstitutionThreat of New EntrantFew buyers can dictate what they wantBuyer Power

Buyer Power Supplier PowerCompetitive RivalryThreat of SubstitutionThreat of New EntrantCompetitive RivalryIf rivals cannot do what you do, then you often have tremendous strength

Buyer Power Supplier PowerCompetitive RivalryThreat of SubstitutionThreat of New Entrant

Supplier PowerThe more you need the supplier, the more powerful your suppliers are

Buyer Power Supplier PowerCompetitive RivalryThreat of SubstitutionThreat of New Entrant

Threat of New EntrantsNew competitors can quickly enter your market if it costs little time or money, few economies of scale in place or you have little protection for your key technologies.

Buyer Power Competitive RivalryThreat of SubstitutionThreat of New EntrantSupplier Power

Threat of SubstitutionAbility of customers to substitute a product. If substitution is easy and viable, then this weakens your power.

Porters Generic StrategiesCOST LEADERSHIP(No Frills)Increasing profits by reducing costs, while charging industry-average prices.Increasing market share through charging lower prices, while still making a reasonable profit on each sale because you've reduced costs.

DIFFERENTIATION(Creating uniquely desirable products and services)Involves making your products or services different from and more attractive than those of your competitors. How you do this depends on the exact nature of your industry and of the products and services themselves. Features, functionality, durability, support and also brand image that your customers value.ScopeNarrowBroadSource of Competitive AdvantageCostDifferentiationFOCUS(offering a specialized service in a niche market)Concentrate on particular niche marketsUnderstand the dynamics of that market & the unique needs of customers within itDevelop uniquely low-cost or well-specified products for the marketCOST FOCUS(Emphasizing cost-minimizationwithin a focused market)DIFFERENTIATION FOCUS(Pursuing strategic differentiationwithin a focused market)Porters Generic StrategiesSource: http://www.mindtools.com/pages/article/newSTR_82.htmSTUCK IN THE MIDDLE(Combination of all generic strategies)COST LEADERSHIPStrong central authorityTight cost controlStandard operating proceduresEasy-to-use manufacturing technologiesHighly efficient procurement and distribution systemsClose supervision; limited employee empowermentFrequent, detailed control reportsDIFFERENTIATIONActs in an organic, loosely-knit way, with strong coordination among departmentsCreative flair, thinks out-of-the -boxStrong capability in basic researchStrong marketing abilitiesRewards employee innovationCorporate reputation for quality or technological leadershipScopeNarrowBroadSource of Competitive AdvantageCostDifferentiationFOCUSCombination of above policies directed or specific strategic targetValues and rewards flexibility and customer intimacyMeasures cost of providing service and maintaining customer loyaltyPushes empowerment to employees with customer contact

Organizational Characteristics for Porters Competitive StrategiesExampleScopeNarrowBroadSource of Competitive AdvantageCostDifferentiationjetBlue Low cost airlineAmerican Airlines Southwest AirlinesSkywest Airlines 18Plot that StrategyBeverages

Cost Leadership Pop ColaDifferentiation Coca-colaCost Focus Zesto FruitsodaDifferentiation Focus - Zevia

20ScopeNarrowBroadSource of Competitive AdvantageCostDifferentiationCost Leadership Pop ColaDifferentiation Coca-colaCost Focus Zesto FruitsodaDifferentiation Focus - Zevia21Cars

Cost Leadership ToyotaDifferentiation - VolvoFocus Cost SuzukiFocused Differentiation Rolls Royce

22ScopeNarrowBroadSource of Competitive AdvantageCostDifferentiationCost Leadership ToyotaDifferentiation - VolvoFocus Cost SuzukiFocused Differentiation Rolls Royce

23Hotels

Cost Leadership Go Hotels!Differentiation City of DreamsFocus Cost Victoria CourtFocused Differentiation Ritz Carlton

24ScopeNarrowBroadSource of Competitive AdvantageCostDifferentiationCost Leadership Go Hotels!Differentiation City of DreamsFocus Cost Victoria CourtFocused Differentiation Ritz Carlton

25So, how do you choose a strategy?26Industry ForceGeneric StrategiesCost LeadershipDifferentiationFocusEntry BarriersAbility to cut price in retaliation deters potential entrantsCustomer loyalty can discourage potential entrantsFocusing develops core competencies that can act as an entry barrierBuyer PowerAbility to offer lower price to powerful buyersLarge buyers have less power to negotiate because of few close alternativesLarge buyers have less power to negotiate because of few alternativesSupplier PowerBetter insulated from powerful suppliersBetter able to pass on supplier price increases to customersSuppliers have power because of low volumes; a differentiation-focused firm is better able to pass on supplier price increasesThreat of SubstitutesCan use lo price to defend against substitutesCustomers become attached to differentiating attributes, reducing threat of substitutesSpecialized products & core competency protect against substitutesRivalryBetter able to compete on priceBrand loyalty to keep customers from rivalsRivals cannot meet differentiation-focused customer needshttp://www.quickmba.com/strategy/generic.shtmlCharacteristics of the generic strategies in the context of the Porters 5 forces27

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