1.

1 Introduction to Competitive Strategies

Today, companies face their toughest competition ever. Companies’ use their understanding to
design market offers to deliver more value than the offers of competitors seeking to win the same
customers. Companies must also understand their competitors, identify and analyze their
strategies to position themselves in such a way as to gain the greatest possible competitive
advantage against competitors in the marketplace. (Mahajan,Vijay, Eitan, and Frank, 2011)
1.2 Variation of Strategies
There are countless variations in the competitive strategies that companies employ, mainly
because each company's strategic approach entails custom-designed actions to fit its own
circumstances and industry environment. Managers at different companies always have a slightly
different spin on future market conditions and how to best align their company's strategy with
these conditions; moreover, they have different notions of how they intend to outmaneuver rivals
and what strategic options make the most sense for their particular company. (Mahajan,Vijay,
Eitan, and Frank, 2011)
1.3 Generic and Specific Strategies that should be adopted to encounter the Threat
Cost leadership strategy-striving to achieve lower overall costs than rivals and appealing to a
broad spectrum of customers, usually by under pricing rivals. A firm tries to reduce its overall
production and distribution costs. It wins market share by appealing to cost-conscious customers.
It sets the lowest prices in the target market segment, or at least the lowest price to value ratio.
Three specific strategies to achieve this are through Economies of scale low direct and indirect
operating costs control over the supply chain. Examples of Companies That Use Cost Leadership
Strategies Wal-Mart, achieved by developing close relationships with its suppliers and vendors
to achieve cost savings through large volume purchases and pass these savings to the consumers.
Dell Computers: achieved market share by keeping low inventories and only building computers
to order, procurement advantages from preferential access to raw materials, or backward
integration (Lilien, and Rangasaway, 2008).
A broad Differentiation Strategy; this strategy seeking to differentiate the company's product
offering from rivals' in ways that will appeal to a broad spectrum of buyers. A company
concentrates on differentiating the products in some way in order to compete successfully.
Appropriate where the target customer segment is not price-sensitive, the market is competitive,
customers have very specific under-served needs and the firm has unique resources to satisfy
these needs in ways that are difficult to copy. Includes patents or other Intellectual Property (IP),
unique technical expertise, talented personnel or innovative processes. Successful brand
management also results in perceived uniqueness even when the physical product is the same as
competitors. Fashion brands rely heavily on this form of image differentiation. Example of
differentiation strategies; differentiation through Multiple sources: L&T, the engineering firm ,
recruits engineers with excellent qualification and claims superiority in executing projects. Coke
and Pepsi differentiated through brand power. Reva through an electric car Product
Differentiation based on ingredients: HUL Close Up used glycerin instead of calcium carbonate
and secured differentiation and Colgate compelled to copy the same, Product Differentiation
through Additional features: Aristocrat suitcases with wheels, a unique convenience to user.
(Smith, James and Robert, 2005)
A focused (or market niche) strategy based on differentiation-concentrating on a narrow buyer
segment and outcompeting rivals by offering niche members customized attributes that meet
their tastes and requirements better than rivals' products. The firm focuses its marketing effort on
serving a defined, focused market segments with a narrow scope by tailoring its marketing
mix to these specialized markets, it can better meet the needs of that target market.
The focus strategy has two variants:
(a) In cost focus, a firm seeks a cost advantage in its target segment, It exploits differences in
cost behavior in some segments . For instance, Southwest Airlines, famous for its low cost focus
follows basically a linear route structure. It only flies one type of airplane and it wants to stay in
high-density markets and has been highly efficient. (Porter, 2006)
(b) Differentiation focus a firm seeks differentiation in its target segment. It exploits the special
needs of buyers in certain segments. Ferrari, targets high performance sports car segment and
due to differentiation based on design, high performance and grand prix records which allows it
to charge a premium price. (Porter, 2006)
Conclusion
Thus, the competitive strategy may indeed set the tone for the mission of the organization,
because the entire organization must function jointly to provide the level of quality and
performance in the market place that is consistent with the organization’s overall business level
strategy.
References

Lilien, G., and Rangasaway A., (2008) The Analysis of New Entrant:Marketing Engineering,
Addison-Wesley pp.195-204.
Mahajan,Vijay, Eitan Muller, and Frank M. Bass, (2011) “New-Product Diffusion Models,”
Handbooks in OR & M): 349 (23 pages).
Porter, Michael, (2006) "What is strategy?" Harvard Business Review Harvard University Press,
Virginia USA
Smith, James E. and Robert Nau, (2005) “Valuing Risky Projects: Option Pricing Theory and
Decision Analysis,” Management Science, Vol. 41, No. 5, May 1995