Business (Competitive) Strategy

Dr. Mohammad Hamsal, MBA

Strategy Development
Industry
Structure &
Position
Business
Strategy
Resources &
Capabilities

Sustainable
Competitive
Advantage

Competitive strategy is about being different. It

means deliberately choosing to perform activities

differently or to perform different activities than

rivals to deliver a unique mix of value
Michael E. Porter (1996)
Dr. Mohammad Hamsal

Dell Computer
Dell computer has a
direct sell model that
gives the company a
huge advantage over
any competitor

Dr. Mohammad Hamsal

FedEx
FedEx lets you access information
about your packages through your
Internet connection and Web browser

Enter your tracking

number here.

Dr. Mohammad Hamsal

ZARA Fashion Fast Forward

Zara sets itself apart with
its computerized network
that ties stores to design
shops and companyowned factories in real
time.
How can technology be
used to respond quickly
to shifts in consumer
tastes?
Dr. Mohammad Hamsal

Charles Schwab
Schwab was a first mover in
offering stock trades over the
Internet, along with other online
brokers such as E*Trade.
Schwabs willingness to embrace
the Internet early has made
Schwab the largest online broker.

Dr. Mohammad Hamsal

Low-cost Carriers

Dr. Mohammad Hamsal

Business Strategy
Business Strategy

Porter

Treacy & Wiersema

Generic Strategies

Value Disciplines

Overall Cost Leadership

Differentiation
Focus
Focus on competitors

Dr. Mohammad Hamsal

Product Leadership
Operational Excellence
Customer Intimacy
Focus on customer
buying patterns
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Porters Three Generic Strategies

Uniqueness

Low Cost Position

Differentiation

Overall Cost
Leadership

Focus
Focus
Differentiation

Focus Low Cost

Strategic Advantages
Dr. Mohammad Hamsal

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Low Cost
Relatively high market share or access to other
advantages
Building volume through wide product line
and/or serving many customer segments
Aggressive pricing
Initial loses to build market share

Dr. Mohammad Hamsal

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Low Cost Provider Example

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Low-Cost Other Examples

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Differentiation
Defined as something that is viewed as unique
industry wide
May preclude high market share
Requires close relationship with key customers
Requires continual investment in R&D service,
or other differential advantage

Dr. Mohammad Hamsal

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Differentiation Example

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Types of Differentiation Themes

Multiple features Microsoft Windows and
Office
Wide selection and one-stop shopping
Home Depot, Amazon.com
Superior service -- FedEx, Ritz-Carlton
Spare parts availability Caterpillar
Engineering design and performance
Mercedes, BMW
Prestige Rolex
Product reliability Johnson & Johnson
Quality manufacture Toyota, Michelin
Technological leadership 3M Corporation
Top-of-line image Ralph Lauren,
Starbucks, Chanel
Unique taste Dr. Pepper
Dr. Mohammad Hamsal

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Focus
Assumes that a narrow market can be more
effectively or efficiently served than by bigger
competitors
Requirements:
Identification of market niche not being adequately
addressed
Directing firm energies on a particular buyer group,
product line segment, or geographic niche
Meeting buying criteria of niche (either low cost or
differentiation)
Dr. Mohammad Hamsal

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Focus Examples
Ferrari (Differentiated Focus)

Yugo (Low Cost Focus)

Dr. Mohammad Hamsal

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Focus Other Examples

Animal Planet & History Channel
Cable TV
Google
Internet search engines
Porsche
Sports cars
Cannondale
Top-of-the line mountain bikes
Enterprise Rent-a-Car
Provides rental cars to repair garage customers
Bandag
Specialist in truck tire recapping
Dr. Mohammad Hamsal

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Integrated Low Cost/Differentiation

Low Cost
Use a single aircraft model
(Boeing 737)
Use secondary airports
Fly short routes
No meals
15 minute turnaround time
No reserved seats

Differentiation
Focus on customer
satisfaction
High level of employee
dedication
New flight services for
business travellers
(Phones and faxes)

No travel agent reservations

Dr. Mohammad Hamsal

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Source: Heracleous et al. (2009)

Singapore Airlines Combined Strategy

Dr. Mohammad Hamsal

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Product Leadership
Objective: to strive to produce continuous stateof-the-art products and services:
Embrace new ideas that may originate outside of the
company
Quickly commercialize new ideas
Aggressively pursue new solutions that obsolete
current products or services

Dr. Mohammad Hamsal

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Operational Excellence
Objective: to lead the industry in price and
convenience by aggressively seeking ways to
reduce costs:

Minimize overhead
Eliminate production steps
Reduce transaction costs
Deliver products at competitive price with minimal
inconvenience

Dr. Mohammad Hamsal

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Customer Intimacy
Objective: to continually tailor products and
services to fit an increasingly fine definition of
the customer:
Expensive to implement but builds long-term
customer loyalty
Focus on customers lifetime value
Employees receptive to customer requests

Dr. Mohammad Hamsal

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Value Disciplines - Examples

Product Leadership
Hewlett Packard
3M
Rubbermaid
Apple
Nike

Operational Excellence
Dell Computer
Wall Mart
Federal Express
Southwest Airlines

Customer Intimacy
Nordstrom
Home Depot
Steinway
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What is this Companys Strategy?

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What is Your Business Model? Why?

(Customer solutions)

(Integrated services)

Yours?

(Brand)
(Product pyramids)
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Summing It Up
Temporary advantage - whatever you do, sooner or
later the competition duplicates what youve done.
First mover - the company who is first to market with a
new IT-based product or service.
Distribution chain - the path followed from the
originator of a product or service to the end consumer.
Important considerations you should keep in mind as
you work to bring an IT competitive advantage to your
organization include:
1. Be efficient and effective
2. Competition is all around you
3. Push the state-of-the-art
4. IT competitive advantages are only temporary
Dr. Mohammad Hamsal

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