Page 160 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes 8.5 Summary

Business conditions are always changing, so it’s a good practice to periodically step back
and take a hard look at the business strategy and analyse its implementation.

Business Strategy can be defined as a long-term approach to implementing a firm’s business
plans to achieve its business objectives.
A business strategy addresses how the firm competes in a market and how it attains and
sustains competitive advantage.
The term “industry structure” refers to the number and size distribution of firms in an
industry.
The competitive position within the segment then needs to be explored, because only this
will show how the organisation will compete within the segment.
Cost Leadership Strategy emphasises efficiency. By producing high volumes of standardised
products, the firm hopes to take advantage of economies of scale and experience curve
effects.
The product is often a basic no-frills product that is produced at a relatively low cost and
made available to a very large customer base.

Differentiation is aimed at the broad market that involves the creation of a product or
services that is perceived throughout its industry as unique. The company or business unit
may then charge a premium for its product.
Focus Strategy concentrates on a select few target markets and is also called a segmentation
strategy or niche strategy.
8.6 Keywords

Cost Leadership: A strategy whereby a firm aims to deliver its product or service at a price lower
than that of its competitors.

Differentiation: Offering a product or service that is perceived as unique or distinctive by the
customer.
Focus Strategy: The strategy in which a firm focuses on a specific niche in the market place and
develops its competitive advantage by offering products especially developed for that niche.
Industry: A collection of firms offering goods or services that are close substitutes of each other.
Positioning: Occupying a distinct position in the minds of consumers.

8.7 Self Assessment

Fill in the blanks:
1. ....................means the extent to which industry sales are dominated by only a few firms.
2. Competitive positioning gives.............................advantage to the firms.
3. .............................are the tools used for meeting the goals and objectives as designed by the
strategy.
4. A company focuses only the production of ladies shoes. This is an example of............................

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