Competitive

Strategy &
Corporate
level strategy
Ritu Singh
 What Is Competitive Advantage?

• Competitive advantage is a set of qualities that give businesses leverage over their
competition.
• It allows businesses to offer their target market a product or service with higher value than
industry competitors.
• In the long term, this boosts the business' position in their industry and drives a greater
number of sales than competitors.
• Competitive advantage can come in a variety of forms, ranging from expert branding to
intelligently designed distribution networks.
• Often there are multiple factors that combine to create competitive advantage, such as:
Product quality
Strategic pricing
Customer service
Market positioning
Distribution networks
Examples of Competitive Advantage

Access to natural resources that are restricted from competitors

Highly skilled labor

A unique geographic location

Access to new or proprietary technology

Ability to manufacture products at the lowest cost

Brand image recognition

Areas of Modern Competitive
Advantage
Speed of Speed to
Price Technology
delivery market

Customer Personalizatio
Design Scale
service n

Intellectual
property and Experience
trademarks
Porter’s Generic Strategy
 Porters Generic Strategy
Porter's Generic Strategies are part of Michael Porter's strategic management framework, proposing that businesses can achieve competitive advantages
through differentiation, cost leadership, or focus strategies. These strategies are designed to provide businesses with a clear path to compete in their
markets. Here’s an explanation of each strategy along with examples:
1. Cost Leadership
• This strategy aims at becoming the lowest cost producer in the industry, often leading to lower prices for consumers or higher margins. The idea is to
scale operations, optimize production processes, and control costs rigorously.
• Example: Walmart is a classic example of cost leadership. It leverages its massive purchasing power to buy products at lower prices, uses an
efficient logistics system to reduce costs, and passes these savings on to customers through low prices.
2. Differentiation
• Differentiation involves making products or services unique and attractive to consumers compared to competitors. This can be achieved through
design, brand image, technology, features, customer service, or dealer network.
• Example: Apple stands out through differentiation. Its focus on innovative design, user-friendly interface, ecosystem of products and services (like
the iPhone, iPad, Mac, Apple Watch, Apple Music), and a strong brand image allows it to command premium prices.
3. Focus Strategy
• The focus strategy is divided into two parts: cost focus and differentiation focus. This approach involves focusing on a particular buyer group,
segment of the product line, or geographic market. The goal is either to achieve cost leadership or differentiation within the niche.
• Cost Focus Example: Aldi uses a cost focus strategy. It targets cost-conscious consumers by offering a limited selection of products in a no-frills
shopping environment, which enables it to offer lower prices within its target segme
• Differentiation Focus Example: Tesla initially used a differentiation focus strategy by targeting the niche market of luxury electric vehicles (EVs).
DETERMINING STRATEGY
Three stages in determining strategy
• Choose generic strategy. This is like a fundamental strategy and there are three: ๏ cost
leadership ๏ differentiation, and ๏ focus.
• Choose strategic direction. Having decided the fundamental way in which the
organisation is going to compete it then must turn to more detailed matters. The
organisation can expand by: ๏ market penetration, efficiency gains, consolidation and
withdrawal ๏ market development ๏ product development, and ๏ diversification.
• Choose how to grow. Two main approaches:
 Organic. The organisation can grow organically, essentially internally
 Merger/acquisition. Acquire or merge with an already existing organisation.
 Corporate Strategy
• Corporate Strategy takes a portfolio approach to strategic decision making by looking across all of a
firm’s businesses to determine how to create the most value.
• In order to develop a corporate strategy, firms must look at how the various business they own fit
together, how they impact each other, and how the parent company is structured, in order to optimize
human capital, processes, and governance
• Corporate Strategy builds on top of business strategy, which is concerned with the strategic decision
making for an individual business.
• strategic decisions about determining overall scope and direction of a corporation and the way in
which its various business units work together to attain particular goals
• Corporate-level strategy is an action taken to gain a competitive advantage through the selection
and management of combination of businesses competing in several industries or product markets.
• it focuses on how to manage resources, risk, and return across a firm, as opposed to looking at
competitive advantages
 1. STABILITY STRATEGY
• Stability is a critical business goal which is required to defend the existing interest and strengths,
to follow the business objectives, to continue with the existing business, to keep the efficiency
in operations, etc.
• when a company is convinced that it should continue in the existing business and is doing
reasonably well in that business but no scope for significant growth, the stability is the strategy
to be adopted.
• This strategy also requires management to focus on customer retention. This is a popular strategy
used during adverse economic periods.
• “do-the-same thing” strategy endeavors to “do-the-same thing better.”
• Stability strategy is effective when the firm is doing well and the environment is relatively stable.
Stability strategy does not involve a redefinition of the business of the corporation. Since products,
markets and functions remain the same, the business definition also does not change.
3 Types of stability
strategy
Pause/Proceed with
caution,
make no change
operate with a Profit
strategy
 STABILITY STRATEGY
1. A pause/proceed with caution strategy is, in effect, a timeout—an opportunity rest before
continuing a growth or retrenchment strategy. Firms that wish to test the ground before launching
a complete generic strategy, follow this approach. This approach is necessary where an intervening
period of consolidation is thought essential before embarking on major expansion spree. The
objective is to ensure that the strategic changes flow down the organizational levels, necessary
structural changes take place, and the organizational systems adapt to new strategies.
2. A no change strategy :No-Change Strategy, as the name itself suggests, is the stability strategy
followed when an organization aims at maintaining the present business definition. Simply, the
decision of not doing anything new and continuing with the existing business operations and the
practices referred to as a no-change strategy. decision to do nothing new-a choice to continue
current operations and policies for the foreseeable future
3. The Profit Strategy is followed when an organization aims to maintain the profit by whatever means
possible. Due to lower profitability, the firm may cut costs, reduce investments, raise prices, increase
productivity or adopt any methods to overcome the temporary difficulties.
Reasons to adopt for stability strategy in
strategic management:
1. In case the firm wants to make its position stronger in its operating industry.
2. When an organisation do not want to take a huge risk in case the economy is facing a recession, the country is slowing down.
3. In case the company have a huge debt or loan to pay it back. It is to make sure that the company will be able to pay the principal
and interest amount with convenience.
4. If the industry has reached maturity and the future does not hold the prospects of growth.
5. If the ROI received from the expansion is negative.
6. Suppose the market current position or earrings are in a satisfying position then management can opt for this position.
7. A stability strategy is also used for risk management in an organization.
8. Companies also adopt a stability strategy after post-merger, if the transition happened smoothly.
9. Stability strategy in strategic management allows the organization to take a break in fast-growth years to plan and formulate
future growth and expansion plans.
10.Family businesses also opt for this strategy when they do not want to give their financial control in the case when the market or
economic conditions are not good.
ADVANTAGES & DISADVANTAGES
OF STABILITY STRATEGY
Example
• This strategy is common with large and dominant companies in mature industries where the
important challenge is to maintain the current position.
• Another category of industries this strategy is common with is the regulated industries such as alcoholic
beverages, tobacco products, etc.
• Many family dominated small and medium companies also prefer this strategy.
• Steel Authority Of India : Steel Authority of India is a public sector company in India which is operated
and governed by the central government of India. Their headquarters is located in New Delhi.Steel
Authority of India is the third-fastest growing in the world. Over-capacity in the industry caused the
organization to adopt for stability strategy.They only focused on the company operations i:e increase
efficiency rather than increases more plants.
• Bata :Bata India is also a good example of stability strategy but the only drawback,
in this case, they didn’t handle this strategy very well. They always stuck to their
footwear industry and never indulged into the activities of expansion.These
companies have also adopted a stability strategy instead of expansion because of
being part of the private sector and government decision
2.GROWTH STRATEGY
• If the answer to the question ‘Should the company
increase the level of activities in the current business
and/or enter new businesses)?’ is affirmative, a growth
(expansion) strategy is called for.
• The growth strategy amounts to redefining the
business by adding new products/services or new
markets or by substantially increasing the current
business.
• A company may pursue either or both
internal or external growth strategies.
A company can adopt expansion strategy in the
following five ways:

1. Concentration
2. Integration
3. Diversification
4. Cooperation
5. Internationalization
1. CONCENTRATION
• Concentration involves converging resources in one or more of a firm’s businesses in
terms of products, markets or functions in such a manner that it results in expansion.
• Concentration strategies are variously known as intensification, focus or specialization.
• Concentration strategies involve investment of resources in a product line for an
identified market with the help of proven technology.
• This may be done following through the below strategies
(i) Market penetration
(ii) Market development
(iii) Product development
(iv)Diversification
Market Penetration:
• In the Ansoff Matrix, a market penetration strategy involves increasing market share in an existing market.
• Common methods include lowering prices or using techniques like direct marketing to create customer awareness of your
offerings.
• In a growing market, it may be comparatively easy for companies with a small share, or new
competitors, to gain market share because the absolute level of sales of the established companies may
still be increasing; and in some cases, those companies may be unable or unwilling to meet the new
demand.
• In static markets, market penetration can be much more difficult to achieve. In mature markets the
market penetration is still more difficult due to the advantageous cost structure of market leader that
prevent the sudden entry of competitors with lower market share. However, the complacency of market
leaders may allow smaller- share competitors to gain share or may build a reputation in a market
segment of little interest to the market leader, from which it penetrates the wider market.
• Sometimes market penetration, particularly of mature markets, can be achieved through collaboration
with others.
• In declining markets, the market penetration is possible to the extent other firms exit from the market.
If they do, it may be relatively easy for a company to increase its share of that market.

Market Development:
• Market development refers to the attempts of an organization to maintain the security of its present
products while venturing into new market areas. It includes- (a) entering new market segments, (b)
exploiting new uses for the product and (c) spreading into new geographical areas.
• A new market can refer to a different geography (for example, international expansion), a new segment
of customers, or a new channel to reach customers, such as adding an online store to complement your
brick-and-mortar location
Product Development:
• Product development is the creation of new or improved products to replace existing ones. The
company maintains the security of its present markets while changing products or developing new
ones..
• This can be as simple as an ice cream shop offering a new flavor, or as complex as introducing an entirely different product line,
like if the ice cream shop began selling sandwiches.
• The wet shaving industry is an example that depends on product development to create successive
waves of consumer demand. For instance, in 1989 Gillette came out with its new Sensor shaving
system that significantly increased its market share. In turn, Wilkinson Sword responded with its
version of the product

Diversification:
• The diversification growth strategy holds the greatest risk of failure.
• Creating new products for new markets means the business is a trailblazer.
• As a result, it’s challenging to know how to succeed, although the rewards are higher if you do (see: Apple convincing us that we
needed a tablet, an entirely new product category, to complement our laptops and smartphones).
Expansion through
Diversification
This strategy involves diversifying the value offering of the company in one of two
methods:
1) Concentric Diversification entails developing a new value proposition that are related
to existing value propositions; or
2) Conglomerate Diversification entail entering into new markets (either with an existing
value proposition or by combining with another industry competitor). This strategy
generally reduces specific industry risks, such as an economic downturn. The profits of one
value offering might offset losses in another business unit during difficult times.
Expansion through Integration

Integration involves the consolidation of operational units anywhere along the value chain to create
greater efficiency and produce economies of scale.
Unlike other strategies, it does not involve making changes to existing markets or targeting new
customer groups.
1. There are two primary types of integration:
1) Vertical integration involves consolidation up or down the value chain.
Forward vertical integration involves consolidating closer to the point at which value is delivered
to the consumer.
Backward vertical integration involves consolidating closer to the genesis of value (such as the point
of manufacturing).
2) Horizontal integration involves consolidating operations at the same point in the value chain. This
consolidation may be between business units or by acquiring or combining with a competitors.
 INTEGRATION
Forward Integration :
• occurs when a company decides to take control of the post-production process. So, that car manufacturer may acquire an
automotive dealership through forward integration by acquiring a business ahead of its own supply chain. This gets the
manufacturer closer to the consumer and gives the company more revenue
• The company gains control of the business activities that are ahead in the value chain example FMCG goods production
company acquires or starts a distribution company. Now the company can have control over its distribution process.

Backward Integration :
• occurs when a company decides to buy another business that makes an input product for the acquiring company's product
The company gains control of the business activities that were behind in their value chain.
• Example: Clothing manufacturing company acquires or starts a fabric company. Now the company can have adequate raw
materials for producing cloths., For example, a car manufacturer pursues backward integration when it acquires a tire
manufacturer.
• A horizontal acquisition is a business strategy where one company takes over another that operates at the same level in an
industry
• Vertical integration involves the acquisition of business operations within the same production vertical.
Expansion through Cooperation -
• This strategy entails working closely with a competitor (while potentially still competing against them in the market).
• Working with the competitor provides both companies an advantage that trumps any advantage (or disadvantage caused to
the competitor) from not working together. Working together will generally provide operational efficiency to one or both
competitors or expand the market potential for one or both competitors.
• Working together may take the form of consolidation of business units (mergers or acquisitions), strategic alliance
(affinity group or association), or joint venture (loose partnership-like alliance generally used to undertake a project or
enter into foreign markets).
Expansion through Internationalization -
This method involves creating new markets for a value offering by looking outside of the immediate nation. Generally, this
option is preferable when there is little room for expansion in domestic markets. Internationalization can be carried out
through the following strategic approaches:
1) International Strategy - focusing on offering a value proposition in a foreign country without modification of
differentiation;
2) Multi-domestic Strategy - involves modifying or differentiating a product to make it attractive or suitable to foreign
markets;
3) Global Strategy - focuses on delivering the standardized value proposition in countries where there is a low-cost
structure for delivery;
4) Transnational Strategy - employs both a global and multi-domestic strategy by modifying or differentiating a product
in foreign markets where there is a low cost structure that results in profits from delivering the value proposition.
Example :Backward
Integeration
• Amazon began as an online book retailer in 1995, procuring books from publishers. In
2009, it opened its own dedicated publishing division, acquiring the rights to both
older and new titles. It now has several imprints.
• Although it still sells books produced by others, its own publishing efforts have
boosted profits by attracting consumers to its own products, helped control
distribution on its Kindle platform, and given it leverage over other publishing houses.
• In short, Amazon used backward integration to expand its business and become both a
book retailer and a book publisher.
Reasons for Adopting Expansion Strategy:

1. If business environments are volatile, expansion

may be a necessary strategy for survival.
2. Many executives may feel more satisfied with
the prospects of growth expansion.
3. Chief Executive Officer may feel pride in
presiding over organizations perceived to be
growth-oriented.
4. Some executives believe that expansion is in the
benefit of the society.
5. Expansion provides more financial and other
rewards.
6. Expansion enables to reap advantages from the
experience curve and scale of operations
Examples of successful growth strategies

1. Facebook
• Facebook is ubiquitous today, but when it launched in 2004, it was one of several social media
networks. MySpace was the dominant social media site at the time. So how did Facebook take over?
• The company used a market penetration growth strategy. It started by focusing on a narrow target
customer base, then expanded gradually. Here’s how Facebook did it.
• Start small: Facebook began in the Harvard dorm room of Mark Zuckerberg. Consequently, the initial
customer base was Harvard students.
• Expand gradually: Once Facebook gained traction at Harvard, it gradually expanded to other colleges.
This allowed the company to grow using the same success model employed at Harvard.
• Increase growth when you’re ready: After Facebook spread to colleges, it opened up to non-students.
Its measured expansion allowed Facebook to focus on adjusting the product to the needs of each new
customer segment. As a result, it avoided the growth challenges that led to MySpace’s decline.
Cont..
2. Amazon
• Amazon’s retail dominance began in 1995. Back then, consumers were not used to buying online.
Despite that, Amazon grew to billions of dollars in annual sales. What enabled Amazon’s growth?
• The answer is a diversification growth strategy
• Amazon was among the earliest online retailers, offering the ability to buy online (a new concept at the
time) in a new market: the internet. Here’s the growth strategy approach Amazon took.
• Offer an improved customer experience: It started by providing customers a larger selection of books
than was available in brick-and-mortar bookstores. Being online, Amazon did not have the limits of
shelf space. Also, customers could check the site and know right away if a book was in stock. This
convenience allowed Amazon to succeed over larger brick-and-mortar booksellers.
• Rinse and repeat: Amazon then used its proven model in books to expand into adjacent markets, such as
DVD and electronics sales. It continued to grow its offerings, and now it has spread into groceries and
even healthcare.
Google

• Google is renowned for its namesake search engine, but what fueled its growth into the company
now called Alphabet is its outsized revenue. How did Google do it?
• It used a product development growth strategy
• Google started as a business-to-consumer (B2C) company offering a search engine. But it needed
a source of revenue. To achieve that revenue, it developed a new product, AdWords, targeted to
businesses that had to pay to advertise.
• Tailor the product for the customer: Going from a B2C to a business-to-business (B2B) product
required a new set of capabilities designed for its B2B audience.
• The new product should complement existing products: Google made sure its new AdWords
product fit seamlessly into the experience of its B2C product. It had to safeguard the speed of its
search engine, so it offered text ads, which loaded quickly, and looked like the other search engine
results. This guaranteed the consumer experience was not degraded by advertising, ensuring that
consumers would continue using the search engine.
Retrenchment Strategy
Retrenchment strategy, also known as defensive strategy, involves
contraction of the scope or level of business or function.
In some cases, it amounts to a redefinition of the business.
A firm pursues a retrenchment strategy when:
1. It drops product line(s), market(s), market segment(s) or function(s).
2. Focuses on functional improvements or reversing certain
deteriorating trends.
Reasons for following retrenchment strategy:

1. The firm is doing poorly.

2. If there is pressure from various groups of stakeholders to improve performance
3. If better opportunities of doing business are available elsewhere a firm can better utilize
its strengths.
• Turnaround Strategy - This is a restructuring strategy. It calls for realigning operations to be more cost efficient or
profitable. It often comes in response to an ineffective strategy causing harm to the company.
• Divestment Strategy - This means reducing operations or completing divesting (getting rid of) a business unity.
Generally, the operational unit will be losing money or not fit with the companys core operational objectives. Some
the drivers of this strategy are negative cash flows, sustained losses, poor business integration, better alternative use
of assets, the value proposition is becoming obsolete, rising costs, or small (non-growing) market share. The firm
may now allocate resources to a more profitable or appropriately aligned business unit. Generally, a divestment
comes after a turnaround strategy has proved ineffective.
• Liquidation Strategy - A liquidation strategy is similar to a divestment. It focuses on selling specific assets or
shutting down business units. Unlike divestment, which seeks to streamline operations and focus resource
allocation, liquidation sees a business unit as a loss or failure. Scenarios leading to a liquidation strategy include:
extensive losses, lack of profitability, failure of a current strategy, obsolete assets, or technology, ineffective
processes, obsolete value proposition, poor management, or lack of integration of the business unit.
• .
• Turnaround strategy Is backing out or retreating from the decision wrongly made earlier
and transforming from a loss making company to a profit making company.
• Dell is the best example of a turnaround strategy. In 2006. Dell announced the cost-
cutting measures and to do so; it started selling its products directly, but unfortunately, it
suffered huge losses. Then in 2007, Dell withdrew its direct selling strategy and started
selling its computers through the retail outlets and today it is the second largest computer
retailer in the world.
Defensive Strategies include:

1. Divestiture,

2. Liquidation,

3. Becoming a
captive and

4. Turnaround.
1. Divestiture:
• A divestiture strategy is pursued when a company sells or divests itself of a business or part of a business. It
may be because of loss, less than target rate of return, urgency to mobilise funds, managerial problems, or
redefinition of the business of the company.
2. Liquidation:
• Liquidation occurs when an entire company is sold or dissolved. The reasons for divestiture mentioned above
could also be reasons for liquidation.
• When there are no buyers for a company that wants to be sold, its assets may be sExpansion through
Integration
• old and company may be wound up.
3. Becoming a Captive:
• A firm becomes a captive of another firm when it subjects itself to the decision of the other firm in return for a
guarantee that a certain amount of the captive’s product will be purchased by the other firm.
4. Turnaround Strategy:
• A turnaround strategy involves management measures designed to reverse certain negative trends and to
bring the firm back to normal health and profitability.
 Combination Strategy:

A company pursues a combination strategy when it adopts more than one grand strategy
(i.e., stability, growth and retrenchment) simultaneously or sequentially.
The reason for pursuing a combination strategy is the existence of a combination of reasons
for any two or more of the other three generic strategies.
Under the combination strategy, a company adopts any one of the following:
1. Stability and growth strategies.
2. Stability and retrenchment strategies.
3. Growth and retrenchment strategies.
4. Growth, retrenchment and stability strategies.
Reasons for following
Combination strategies
1.When the organization is large and faces a fast changing complex environment
2. The company’s products are in different stages of the life-cycle.
3. A combination strategy is suitable for a multiple-industry firm at the time of recession.
4. The combination strategy is best for firms, divisions of which perform unevenly or do not
have the same future potential.
 Multinational corporations choose
from among three basic international
strategies:
(1) multidomestic,

International
Strategies (2) global, and

(3) transnational
Multi Domestic Strategy
• Sacrifices efficiency in favor of emphasizing responsiveness to local requirements within
each of its markets.
• Rather than trying to force all of its american-made shows on viewers around the globe,
mtv customizes the programming that is shown on its channels within dozens of
countries, including new zealand, portugal, pakistan, and india.
GLOBAL STRATEGY
• sacrifices responsiveness to local requirements within each of its markets in favor of
emphasizing efficiency. This strategy is the complete opposite of a multidomestic
strategy. Some minor modifications to products and services may be made in various
markets, but a global strategy stresses the need to gain economies of scale by offering
essentially the same products or services in each market.
• Microsoft, for example, offers the same software programs around the world but adjusts
the programs to match local languages. Similarly, consumer goods maker Procter &
Gamble attempts to gain efficiency by creating global brands whenever possible. Global
strategies also can be very effective for firms whose product or service is largely hidden
from the customer’s view, such as silicon chip maker Intel. For such firms, variance in
local preferences is not very important.
Transnational Strategy
• This strategy seeks a middle ground between a multidomestic strategy and a global strategy. Such a firm
tries to balance the desire for efficiency with the need to adjust to local preferences within various
countries

• In France, for example, wine can be purchased at McDonald’s. This approach makes sense for
McDonald’s because wine is a central element of French diets.
• large fast-food chains such as McDonald’s and KFC rely on the same brand names and the same core
menu items around the world. These firms make some concessions to local tastes too
Important questions
• Porter’s generic strategy with examples
• Stability strategy in detail with examples
• Growth strategy in detail with difrrent types and examples
• Retrenchment strategy in detail with examples
• Ansoff matrix
• Why firms are following : Stability strategy , growth strategy
retrenchment strategy – specify reasons for each