Learning Objectives
    After reading this chapter, you should be able to:
    1. Understand what distinguishes each of the five generic 
        strategies and explain why some of these strategies work 
        better in certain kinds of competitive conditions than in 
        others.
    2. Recognize the major avenues for achieving a competitive 
        advantage based on lower costs.
    3. Identify the major avenues to a competitive advantage-
        based on differentiating a company’s product or service 
        offering from the offerings of rivals.
    4. Explain the attributes of a best-cost strategy—a hybrid of 
        low-cost and differentiation strategies.
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                               Chapter Overview
     This chapter describes the five generic competitive strategy 
     options:
     1.  How well is the company’s present strategy working?
     2.  What are the company’s strengths and weaknesses in relation to the 
         market opportunities and external threats?
     3.  What are the company’s most important resources and capabilities, 
         and will they give the company a lasting competitive advantage over 
         rival companies?
     4.  How do a company’s value chain activities impact its cost structure 
         and customer value proposition?
     5.  Is the company competitively stronger or weaker than key rivals?
     6.  What strategic issues and problems merit front-burner managerial 
         attention?
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                        Why Do Strategies Differ?
     A firm’s competitive strategy deals exclusively with 
     the specifics of its efforts to position itself in the 
     market-place, please customers, ward off 
     competitive threats, and achieve a particular kind of 
     competitive advantage.
            Key factors that distinguish one strategy from another:
               Is the firm’s         Is the competitive advantage being 
              market target            pursued linked to low costs or 
            broad or narrow?               product differentiation?
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               Types of Generic Competitive Strategies
      Types                   GENERIC COMPETITIVE STRATEGIES
      Broad,                  Striving to achieve broad lower overall costs than rivals on 
      Low-cost                comparable products that attract a broad spectrum of buyers, usually 
      Strategy:               by underpricing rivals.
      Broad                   Seeking to differentiate the firm’s product offering from its rivals’ with 
      Differentiation         attributes that will appeal to a broad spectrum of buyers.
      Strategy:
      Focused                 Concentrating on a narrow buyer segment (or market niche striving to 
      Low-cost                meet these needs at lower costs than rivals (thereby being able to 
      Strategy:               serve niche members at a lower price).
      Focused                 Concentrating on a narrow buyer segment (or market niche) by 
      Differentiation         offering its members customized attributes that meet their specific 
      Strategy:               tastes and requirements of niche members better than rivals.
      Best-cost               Striving to incorporate upscale product attributes at a lower cost than 
      (Hybrid)                rivals. Being the “best-cost” producer of an upscale, multifeatured 
      Strategy:               product allows a firm to give customers more value for their money by 
                              underpricing rivals whose products have similar upscale, multifeatured 
                              attributes.
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     FIGURE 5.1 The Five Generic Competitive Strategies
                                   Access the text alternative for slide images.
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