The Five Generic Competitive Strategies

“The Five Generic Competitive Strategies”

Competitive Strategies

Competitive strategy concerns the specifics of management´s game plan for competing successfully and securing a competitive advantage over rivals. A company achieves competitive advantage whenever it has some type of edge over rivals in attracting buyers and coping with competitive forces.

The Five Generic Competitive Strategies

There are countless variations in the competitive strategies that companies employ, mainly because each company´s strategic approach entails custom-designed actions to fit its own circumstances and industry environment. The five generic competitive strategies are:

* A low-cost provider strategy: Striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers, usually by under pricing rivals.

* A broad differentiation strategy: Seeking to differentiate the company´s product offering from rivals’ in ways that will appeal to a broad spectrum of buyers.

* A best-cost provider strategy: Giving customers more value for the money by incorporating good-to-excellent product attributes at a lower cost than rivals; the target is to have the lowest (best) costs and prices compared to rivals offering products with comparable attributes.

* A focused strategy based on low cost: Concentrating on a narrow buyer segment and outcompeting rivals by having lower costs than rivals and thus being able to serve niche members at a lower price.

* A focused strategy based on differentiation: Concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rival’s products.

A low-cost provider strategy

A low-cost leader´s basis for competitive advantage is lower overall costs than competitors. Successful low-cost leaders are exceptionally good at finding ways to drive costs out of their business. There are two ways to...