Competitive Strategy
DEVELOPING COMPETITIVE STRATEGY
John E. Stinson and William A. Day
Competitive strategies. All companies have one (or more). Sometimes they are clear and well understood throughout the organization. Sometimes they are rather muddy. Sometimes they have been deliberately established; sometimes they have simply evolved. For our purposes here, we are assuming that it is better if the strategies are deliberately established, clear, and well understood.
"'Customer focus' is knowing what customers want and fulfilling their expectations with innovative products and quality services.
In this report, we will focus on the development of competitive strategy. We will examine some common strategies utilized by organizations. We will learn about environmental scanning and driving forces, learn how to do strategic analysis, and determine how to maintain competitive advantage. STRATEGY IN ACTION When Ray Kroch started McDonald's, he started with small, walk-up stores located in suburban areas. The stores, staffed by 3-4 people and open from 11:00 AM to 11:00 PM, offered only a very limited menu (hamburgers, cheeseburgers, french fries, shakes, and soft drinks). His target customers were primarily young people and young families. To attract customers, McDonald's offered low prices. Their hamburgers cost 10 cents. At that time, a hamburger in most restaurants cost between 25 and 50 cents. They also differentiated themselves by offering fast service (immediate availability of product). Rather than having customers wait while the food was prepared, it was always ready at McDonald's. Once you placed your order, there was almost zero wait-time. This in contrast to their competition, where you had to place an order, wait while the food was prepared, wait to be served, and wait for your check. Thus McDonald's used a classic strategy. They focused on a specific type of customer, in a specific type of location, with a limited product line, minimizing their costs, and competing on
John E. Stinson and William A. Day
Competitive strategies. All companies have one (or more). Sometimes they are clear and well understood throughout the organization. Sometimes they are rather muddy. Sometimes they have been deliberately established; sometimes they have simply evolved. For our purposes here, we are assuming that it is better if the strategies are deliberately established, clear, and well understood.
"'Customer focus' is knowing what customers want and fulfilling their expectations with innovative products and quality services.
In this report, we will focus on the development of competitive strategy. We will examine some common strategies utilized by organizations. We will learn about environmental scanning and driving forces, learn how to do strategic analysis, and determine how to maintain competitive advantage. STRATEGY IN ACTION When Ray Kroch started McDonald's, he started with small, walk-up stores located in suburban areas. The stores, staffed by 3-4 people and open from 11:00 AM to 11:00 PM, offered only a very limited menu (hamburgers, cheeseburgers, french fries, shakes, and soft drinks). His target customers were primarily young people and young families. To attract customers, McDonald's offered low prices. Their hamburgers cost 10 cents. At that time, a hamburger in most restaurants cost between 25 and 50 cents. They also differentiated themselves by offering fast service (immediate availability of product). Rather than having customers wait while the food was prepared, it was always ready at McDonald's. Once you placed your order, there was almost zero wait-time. This in contrast to their competition, where you had to place an order, wait while the food was prepared, wait to be served, and wait for your check. Thus McDonald's used a classic strategy. They focused on a specific type of customer, in a specific type of location, with a limited product line, minimizing their costs, and competing on