Chapter 3: Action Step 3

Choose a Winning Strategy:

How will you distinguish your product or service from others?

The Two Fundamental Strategies

• Low-Cost Leadership– Sell at a lower price than your competition– Be certain you can still make a profit

• Differentiation– Identify the needs of your customers– Meet them better than your competition

Examples of Strong Competitive Advantages

• Patent

• Government granted license or monopoly

• An effective or de facto monopoly

• Strong name brand

• Speed…in service or delivery

Other Competitive Advantages

• Lower price

• Great service

• Positive image or brand

• Good reputation

• High status image

SWOT Analysis: Tool for Seeing the Competitive Advantages of an Existing

Business

Internal External

Positives Strengths Opportunities

Negatives Weaknesses Threats

Anticipate an Exit Strategy

• Give to family members

• Sell to competitor

• Sell to employee(s)

• Sell to someone else

• Close

• Other? Go public?

Best Strategies for Emerging Industries

• Bold, win-early strategy

• Product, or service superiority

• Superserve niche markets

• Pick the winning technology early

• Build early brand loyalty

Best Strategies for Maturing Industries

• Reduce cost

• Focus on major customers

• Expand to new markets

• Purchase rivals

Best Strategies for Stagnant or Declining Industries

• Focus on niches, especially growing niches

• Differentiate your product or service

• Innovate

• Reduce cost as much as possible

Best Strategies for Fragmented Industries

• Focus on a local market

• Specialize

• Create formula facilities

• Keep costs down

Best Strategies for Industries with Dominant Leaders

• Focus on the long term…it may take a long time to beat the big guys

• Take risks with new products or services

• Know the market you are serving better than anyone else