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Strategy and   Competitive Advantage
  Competitive advantage e'ists when a firm(s strategy gives it an edge in Defending against competitive forces and  Securing customers
  Convince customers firm(s product ) service offers superior value %ffer *uyers a good product at a lower price +se differentiation to provide a better product  
*uyers thin, is worth a premium price
Key to Gaining a Competitive Advantage
 
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Figure 5.1: he Five !eneric  Competitive Strategies
   M   a   r    k   e    t    T   a   r   g   e    t
Type of Advantage Sought
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  Find ways to drive costs out  of *usiness year-
after-year 
manufacturing or production costs
manufa$turing or produ$tion $osts)
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Figure 5.': &econ(iguring $alue Chain Systems to "ower Costs So(tware )ndustry
A* +alue Chain System of Software "evelopers ,sing
Traditional holesale-%etail Channels - *ighest Cost  
Software
development
a$tivities
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Figure 5.': &econ(iguring $alue Chain Systems to "ower Costs So(tware )ndustry
!* +alue Chain System of Software "evelopers
,sing "ire$t Sales and hysi$al "elivery of C"s
Software
development
a$tivities
Cost 
Software
development
a$tivities
Online
marketing
and
promotion
a$tivities
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+i((erentiation Strategies
  !ncorporate differentiating features that cause *uyers to prefer firm(s product or service over *rands of rivas
  Find ways to differentiate that create value for *uyers and that are not easily matched  or   cheaply copied  *y rivas
  5ot spending more to achieve differentiation than the price premium that can *e charged
Keys to Su$$ess
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,est Cost -rovider Strategies
  Com*ine a strategic emphasis on lowcost  with a strategic emphasis on di((erentiation "a,e an upscae product at a ower cost Give customers more vaue for the money
  Deiver superior vaue *y meeting or eceeding   *uyer e'pectations on product attri*utes and beating  their price e'pectations
  Be the ow-cost provider of a product with goodto  ecellent  product attri*utes/ then use cost advantage to underprice compara*e *rands
O.(e$tives
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*ow a ,estCost Strategy  +i((ers (rom a "owCost Strategy 
   #im of a ow-cost strategy-- Achieve lower costs than any other competitor in the industry 
  !ntent of a *est-cost strategy--/a0e a more upscale product  at lower costs than the ma0ers o( other brands with comparable (eatures and attributes
 
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Focus ) iche Strategies
  !nvove concentrated  attention on a narrow piece of the tota mar,et
  Serve niche *uyers better than rivas
  Choose a mar,et niche where *uyers have distinctive preferences/ specia re$uirements/ or uni$ue needs
  Deveop uni$ue capa*iities to serve needs of target *uyer segment
O.(e$tive