SSP Generic Strategies

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  1. Generic Strategies
    A useful framework for a firm to obtain competitive advantage over its rivals
  2. 1. Cost leadership
    • to be the lowest cost producer in an industry.
    • compete on price
    • earn the highest unit profits
    • to achieve cost leadership:
    • Seek to set up production facilities for mass production as these will facilitate the economies of scale advantages
    • Invest in the latest technologyimproved
    • quality less labour needed.
    • Seek to obtain favourable access to sources of raw materials.
    • Look to develop product designs that facilitate automation.
    • Minimise overhead costs by exploiting bargaining power
    • Concentrate on productivity objectives and
    • constantly seek to improve efficiency and economy, e.g., value chain analysis.
  3. 2. Differentiation
    • provides something unique that is valuable to buyers
    • Differentiation occurs when the differentiated product is able to obtain a price premium in the market, which is above the cost incurred to create the differentiation.
    • As a consequence of differentiation being about uniqueness it is not really possible to give an exhaustive list detailing how a firm may differentiate itself.
    • To truly differentiate yourself we must understand the product or service offered and the customer to whom you are selling it
  4. 3. Focus
    • A focus strategy is based on fragmenting the market and focusing on particular market niche.
    • The firm will not market its products industry-wide but will concentrate on a particular type of buyer or geographical area.
    • Cost focus: This involves selectinga particular niche in the market and focusing on providing products for thatniche. By concentrating on a limited range of products or a small geographical area the costs can be kept low.
    • Differentiation focus: Select a particular niche and concentrate on competing in that niche on the basis of differentiation, e.g., luxury goods.
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SSP Generic Strategies
2014-01-14 16:38:24

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