Competitive strategy is a part of strategic planning process. Strategic planning can be divided into three generic types; corporate strategy, competitive strategy and functional strategy. Each strategy plays its part for the well being of an organization in the long run. We will define competitive strategy first as is the centerpiece of our
research. Then a brief overview of corporate and financial strategy will be presented. Competitive strategy can also be called as business-level strategy.
Competitive strategy refers to how a company competes in a particular business (note: overall strategy for diversified firms is referred to as corporate strategy). Competitive strategy is concerned with how a company can gain a competitive advantage through a distinctive way of competing. It identifies how to build and strengthen the business’s long term competitive position in the marketplace.
Competitive strategy identifies, for instance, how Toyota will compete with Honda or how Suzuki competes will compete with Daihatsu and Hyundai. Companies try to achieve competitive advantage for each business they are in. We can define competitive advantage as any factors that allow a company to differentiate its .products or service from those of competition to increase its market share. Companies use several generic competitive strategies to achieve competitive advantage.
Types of Competitive Strategy:
• Cost Leadership: It means the enterprise aims to become the low cost leader in an industry. Suzuki is a classic example. It maintains its competitive advantage through selling low price cars.
• Differentiation: In a differentiation strategy a firm seeks to be unique in its industry along dimensions widely that are widely valued by buyers. Thus, Toyota emphasizes reliability and quality. Toyota can usually charge a premium price if it successfully stake a claim to being substantially different from competitors in some coveted way.
• Focusers: Focusers carve out a market niche (like Mercedes-Benz and Ferrari), and compete by providing a product or service customers can get in no other way.
Competitive strategy should be aligned with corporate and functional strategy (will be described latter) so that a firm can efficiently compete in the marketplace (the statement holds true when the intensity of competition is very high, for example, in automobile market).
Submitted in partial fulfillment of the requirement for the degree of BBA.
LETTER OF ACKNOWLEDGEMENT .2
EXECUTIVE SUMMARY 6
1. INTRODUCTION CHAPTER 7
1.0 INTRODUCTION 7
1.1 BRIEF OVERVIEW 7
1.2 BACKGROUND AND HISTORICAL THEORIES 7
1.2.1 Strategies in game theory 7
1.2.2 Porter five forces analysis 8
The Five Forces 8
The threat of substitute products or services 8
The threat of the entry of new competitors 8
The intensity of competitive rivalry 8
The bargaining power of customers (buyers) 9
The bargaining power of suppliers 9
1.3 COMPETITIVE STRATEGY g
‘I .4 TYPES OF COMPETITIVE STRATEGY 9
1.4.1 COST LEADERSHIP 9
1.4.2 DIFFERENTIATION 10
1.4.3 FOCUSERS 10
1.5 OTI-IER STRATEGIES 10
1.5.1 CORPORATE STRATEGY 10
1.5.2 FUNCTIONAL STRATEGY 10
1.6 Achieving Strategic Fit 10
1.6.1 Fit 11
1.6.2 Leverage 11
1.7 UNDERSTANDING MARKETING CONCEPTS TO CREATE COMPETITIVE STRATEGY 11
1.7.1 The Marketing Concept: Focus on Customers 11
1.7.2 The Concept of Exchange ii.
1.7.3 The Concept of Branding 12
b 1.7.4 The Concept of Added Value 12
1.8 THE KEY PLAYERS AND MARKET IN AUTOMOBILE INDUSTRY 12
1.9 TYPES OF MARKET 12
1.10 MAIN LSSUES/ ADVANCES IN THE AREA 13
1.12 OBJECTIVES OF THE STUDY 14
1.13 JUSTIFICATION 14
1.14 LIMITATIONS 15
1.15 SCOPE 15
1.16 ASSUMPTIONS 16
1.17 DEFINITIONS OF KEY TERMS 16
1.17.ICOMPETITIVE STRATEGY 16
1.17.2 COST LEADERSHIP 16
1.17.3 DIFFERENTIATION 17
1.17.5 MARKET SHARE 17
1.17.6 CUSTOMER 17
1.17.7 COMPETITION 17
1.17.8 PERFECT COMPETITION 18
.17.9 OLIGOPOLY 18
1.17.11 CO-OPERATIVE COMPETITION 18
1.17.12 DESTRUCTIVE COMPETITION 18
1.17.13 RIVALS 18
1.17.14 SALES 18
1.17.16 COST 19
1.17.17 INNOVATION 19
2. LITERATURE REVIEW 19
2.0 FACTORS AFFECTING COMPETITIVE STRATEGY 19
II The External Environment 19
2.2 The Macro environment 19
: 23 The Competitive Environment 20
2.3.1 Competitors 20
2.3.2 Customers 21