After we learned what is contestable market model, let us now dive deeper to the last sub topic

entitled firm strategies in highly competitive markets. Im Ashlley Nicole D. Villaran and I’m your
reporter to inclined you with new knowledge and learnings.

2nd

In this new era, businesses have been expand and in order na magkaroon tayo ng successful business,
we must create a strategy that will help to create and gain a competitive advantage against sa ting
mga competitor. In the previous sub topic, ating nalaman kung sino nga ba si michael porter and
masasabi natin na he is the most famous and influential business proffesor in harvard. So Business
strategy is really, essential sa ating businesses to help remove yung mga uncertainties, maanalyse
din natin yung mga potential threats na maaring makasagabal sa operation ng ating firm, and also
makapagimplement tayo ng risk control measures. As a result, various definitions of strategy and its
importance, are discussed in this lesson.

Michael Porter of Harvard University prepared a guidebook for firms to prevail in these competitive
markets in his text Competitive Strategy.
So dito ibinigay niya ang cost leadership strategy and the product differentiation strategy
Cost leadership strategy advises that firms adopt an aggressive program to either keep their costs
below the costs of other sellers. Sa madaling salita ang strategy na ito is nakafocus sa mga customer
kung hanggang saan o magkano ang kaya lang nilang ibigay sa market and dito bumabase ang
businesses sa pagiimplement nila ng cost to gain customers while provideng the rightful quality of
product.

On the other side naman product differentiation strategy is to keep their products distinguishable
from the competition. Ang strategy na ito are focused on their quality and performance of their
product in the long run and to encourage customer na piliin ang product nila since it is proven and
tested. One of the example na pwedeng maalign natin dito is the brand apple. In terms of specs,
performance and also the camera itself ay malalaman natin na highly quality ang mga ginamit to
assemble it compare sa ibang brand ng gadgets. So these differences are used by the firms and
businesses to drive consumer choice.

3rd
The logic of either of these strategies can be viewed as trying to delay the development of the
assumed conditions of perfect competition.
The perfect competition model allows that some firms will do better than others in the short run by
being able to produce a good or service at lower cost, due to having better cost management,
production technologies, or economies of scale or scope. Sa model na ito jinujustify ang pagpproduce
nila ng products at lower cost in the short run since may proper treatment of allocation in terms of
their management.

However, the model assumption of perfect information means that any firms with cost advantages
will soon be discovered and mimicked. In this model, lahat ng consumers and producers have
complete information in terms of all market prices, their own utilty and their cost functions,. sa
madaling salita there is no hidden information na makikita sa concept and model na ito

Next is the monopolistic competition model, so it allows for some differentiation in a product and the
opportunity to charge a higher price because buyers are willing to pay a premium for this. This goods
are the veblen goods or yung mga products na high quality and the main target customers are the
elite persons or yung may kakayahan na iavail ang product at higher price. However, any short-run
opportunity for increased economic profit from selling a unique version of the product will dissipate
as the competition takes notice and most of the businesses will copy this kind of product at lower cost
to attract customers or yung mga shops na gumagawa ng class a product as imitation.

4th
Porter suggests that each of his two strategies may be geared toward participation in a broader
market or limited to a particular segment of the market, which he calls a focus strategy.

A focus strategy endeavors to take advantage of market segmentation. As we discussed in Chapter 3

"Demand and Pricing", the population of buyers is not usually homogeneous or the same; some are
willing to pay a higher price (less price elastic) and some are willing to purchase in greater volume.

By focusing on a particular segment, a firm may be able to maintain an advantage over other sellers
and again forestall the onset of the long-run limitations on seller profits. The goal of the focus strategy
is to be able to serve this segment either at lower cost or with product variations that are valued by
the customer segment. Meaning their target customer are fixed since dun sila nakafocus. Isa sa mga
halimbawa nito is the Pepsi Black. So Pepsi focuses on broad markets to serve many customers.
However, nakafocus lang sila sa specific market to serve a target group since nagpproduced sila ng
healthier product with lower levels of artificial sweetener.

Of course, by focusing on just one or a subset of buyer segments, a firm loses the opportunity for
profits in other segments, so depending on the product, the circumstances of the market, and the
assets of the firm, a broader application of cost leadership or product differentiation may be better.

5th
The potential for success using a cost leadership strategy or a product differentiation strategy might
suggest that a firm can do even better by practicing both cost leadership and product differentiation.

But Porter advises against this, saying that firms that try to use both strategies risk being “stuck in the
middle.”
So these are the reasons why porter are against using this two strategy at the same boat
- sinabi niya that the firm that tries to be a cost leader will typically try to take advantage of scale
economies that favor volume over product features and attract customers who are sensitive to price.
- he also said that the Product differentiation seeks to attract the less price sensitive customer who is
willing to pay more, but the firm may need to spend more to create a product that does this.
- and last is the Firms that try to provide a good or service that costs less than the competition and yet
is seen as better than the competition are endeavoring to achieve two somewhat opposing objectives
at the same time.

All of these strategies are used in highly competitive markets. We all know naman that Business
strategy is important for organisations. As what porter said or yung central message niya for all the
businesses and firms is that strategy is primarily concerned with competitive position, customer
retention and satisfaction, and adding value through mix of activities from those used by competitors.

6th
as we all dive deeper to our lesson, I hope that you gain knowledge upon us and hopefully maapply
niyo ang aming naituro in your future endeavour. Again, on the behalf of my group thank you for
listening and cooperation. babyeee