Introduction

Generic competitive strategies enable a firm to outperform competitors in the industry which will be discussed Set A. These strategies include overall cost leadership, differentiation, and focus. A firm following the cost leadership strategy needs to achieve the lowest cost of production per unit level in the industry. On the other hand, differentiation strategies are aimed at maintaining the exclusivity of the product so that the perceived difference in the product serves as a competitive advantage to the firm. Using focus strategies, the firm tries to capture a particular buyer group, segment of the product line, or geographic market. A firm should adopt and pursue any of the three generic strategies in an industry, and take care to avoid the pitfalls relating to the adoption of each generic strategy. In Set B, the focus is on how to compete successfully in each of the lines of business the company has chosen to engage in through other competitive strategy choices. The central thrust is how to build and improve the company's competitive position for each of its lines of business. A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals. Companies want to develop competitive advantages that have some sustainability. Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals. We will discuss different type competitive strategies in this section which helps company to gain Superior technology and/or product features, better manufacturing technology and skills, superior sales and distribution capabilities, and better customer service and convenience.

Set: A
1. What are the generic strategies as identified by Michael Porter?
Ans: Michael Porter regarded the selection of a defendable position within an industry as the end result
of a competitive strategic analysis. He argued that successful, profitable companies generally choose to compete on either low costs or by differentiating their products to meet specific customer needs. Although these two strategic options are mutually exclusive, he added a third category of firms as niche players that serve a specific market or product segment. Porter's three generic strategies are: Cost leadership strategy, Differentiation strategy and Focus Strategy. Companies can achieve competitive advantages essentially by differentiating their products and services from those of competitors and through low costs. Firms can target their products by a broad target, thereby covering most of the marketplace, or they can focus on a narrow target in the market According to Porter, there are three generic strategies that a company can undertake to attain competitive advantage: cost leadership, differentiation, and focus.

Figure 1: Source: Porter (1985)

Cost leadership
The companies that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. Companies following this strategy place emphasis on cost reduction in every activity in the value chain. It is important to note that a company might be a cost leader but that does not necessarily imply that the company's products would have a low price. In certain instances, the company can for instance charge an average price while following the low cost leadership strategy and reinvest the extra profits into the business (Lynch, 2003). Examples of companies following a cost leadership strategy include RyanAir, and easyJet, in airlines, and ASDA and Tesco, in superstores. The risk of following the cost leadership strategy is that the company's focus on reducing costs, even sometimes at the expense of other vital factors, may become so dominant that the company loses vision of why it embarked on one such strategy in the first place.

Differentiation
When a company differentiates its products, it is often able to charge a premium price for its products or services in the market. Some general examples of differentiation include better service levels to customers, better product performance etc. in comparison with the existing competitors. Porter (1980) has argued that for a company employing a differentiation strategy, there would be extra costs that the company would have to incur. Such extra costs may include high advertising spending to promote a differentiated brand image for the product, which in fact can be considered as a cost and an investment. McDonalds , for example, is differentiated by its very brand name and brand images of Big Mac and Ronald McDonald. Differentiation has many advantages for the firm which makes use of the strategy. Some problematic areas include the difficulty on part of the firm to estimate if the extra costs entailed in differentiation can actually be recovered from the customer through premium pricing. Moreover, successful differentiation strategy of a firm may attract competitors to enter the company's market segment and copy the differentiated product (Lynch, 2003).

Focus
Porter initially presented focus as one of the three generic strategies, but later identified focus as a moderator of the two strategies. Companies employ this strategy by focusing on the areas in a market where there is the least amount of competition (Pearson, 1999). Organisations can make use of the focus strategy by focusing on a specific niche in the market and offering specialised products for that niche. This is why the focus strategy is also sometimes referred to as the niche strategy (Lynch, 2003). Therefore, competitive advantage can be achieved only in the company's target segments by employing the focus strategy. The company can make use of the cost leadership or differentiation approach with regard to the focus strategy. In that, a company using the cost focus approach would aim for a cost advantage in its target segment only. If a company is using the differentiation focus approach, it would aim for differentiation in its target segment only, and not the overall market.

2. Discuss the benefits of low-cost strategy to the business organization? Ans: Low cost strategy is centered on the capability of the company to produce and deliver
products of competitive quality at lower costs. Better way to strategically position a company on the advantage of cost is to increase market share by transforming from lowest cost producer to lowest cost supplier of products. This way the company translates its cost advantage into price advantage for its customers and thereby improves the market share. A business organizations may derive the following benefits from pursuing a low cost strategy:

1.Overcoming threats from competitors : Because of its cost advantage, a company can protect itself from the business-attacks of the competitors. If competitors enter intomarket with low price, the company can even further cut down its prices. This is possible because the company has already developed ways to reduce cost and sustain the cost advantage. Its cost leadership position helps it dominate the competitors. 2. Effective dealing with powerful suppliers: When suppliers are few in number as well as powerful, they may try to increase prices of raw materials/others inputs. The company with a low cost strategy can endure such price-increase because of its overall lower costs. 3. Facing powerful buyers effectively: Powerful big buyers(such as dealers and wholesalers or retail chains like Agora, Wal-Mart) may dictate prices of a companys products. A company that follows a cost leadership strategy is less affected by such actions of buyers. 4.Encountering threats from substitute products: A low-cost leader is able to overcome threats from substitute products.It can reduce the price of its products if substitute products start entering into the market.Low-cost leadership helps the company retain its market value. 5. Overcoming threats from the entry of potential competitors: A company with a low-cost strategy can discourage other potential investors to come to the market. Its cost advantage automatically creates barriers to entry. Other companies may fnd it difficult to match their costs with that of the low-cost leader.

Wal-Mart is an example that continuously strives to reduce costs and in the market place it has got the image of supplier of products at the lowest prices. This is how Wal-Mart captures the markets and eliminates the competitors and improves revenues and market share.

3. Discuss the market situation favorable for low-cost strategy? Ans: A Companys strategy of selling its products at a price lower than its competitors is known
as low-cost strategy. The company intends to gain market share through underpricing competitors. Low-cost strategy doesnt work in all situation. Below described the market favorable situation of low-cost strategy. A low-cost provider strategy works best under the following situations: 1. When the brand differences from company to company are minor and at the same time, the products are standardized and readily available. 2. When the market is composed of a large number of price sensitive buyers who want to buy products at the lowest possible price. 3. When there are few ways to achieve product differentiation. It means that it is difficult to differentiate the companys products from those of competitors due to the nature of the product. Buyers become sensitive to price differences when product to product differences are negligible. In such a situation, they will go for the lowest price. 4. When switching cost from the companys brand to competitors brans are low or even zero. If buyers purchase another brand and this switching from the previous brand does not involve any additional cost (such as transportation or repair) they are likely to pot for the lower-priced brand. 5. When there are a large number of buyers with significant bargaining power, i.e. they have significant power to negotiate price-related terms and conditions. 6. When price-competition among the sellers/suppliers is very tough. Low-cost strategy helps products to compete effectively based on the price. 7. When the company is I a position to use the lower-cost edge to attract price-sensitive buyers in great enough numbers to influence total profits. So depend on the situation company may follow low-cost strategy. When a company becomes a low-cost leader , it is likely to earn above-average profits.

4. What are the difference ways to achieving product differentiation?

Ans: Product differentiation is the act of designing a set of meaningful differences to distinguish the companys products from competitors. Features and characteristics of a product can be used as the basis of product differentiation. A differentiated product is unique by itself. Hill and Jones suggested several ways to achieve differentiation in a companys products.

1. Differences in quality: A company may differentiate its products simply by increasing

quality and reliability. Otobi in furniture and Aziz pipes in PVC products have sometimes followed differentiation strategy based on quality 2. Innovation: For highly technologically complex products,innovation is an important source for differentiation.Computers,stereos,television sets and refrigerators require differentiation based on new innovated features. When products include innovated/valuable features,customers agree to pay for it. 3. Responsiveness to customers: A company may differentiate a product based on responsiveness to customers.When this becomes the basis for differentiation,the company offers comprehensive after-sales services including repair. This sort of differentiation is highly workable in the case of products which require frequent after-sales services , such as microwave oven, television sts, computers, cars and the like. In Bangladesh, for example, 5M group of companies and Rangs-Sony are famous for their excellence in responsiveness to customers. 4. Responding to customers psychological desires: An important source of product differentiation is a companys response to the psychological desires of customers. Customers may desire to have a special status or unique prestige from using a product. This is especially important in the case of luxury or fashion goods and specialty products. Many customers feel proud of having a BMW car or a Rolex watch. 5. Wide choice of Customers: Differentiation of a product may be done by making available items of any kind in the same product-line instantly to customers as per their demand. Berger Paints Ltd. Has adopted differentiation strategy by making color bank program. By this strategy any shade of color can be provided instantly to any retail paint-customers. It has given a competitive advantage over the competitors.

Besides below given a classification of ways for achieving a differentiation advantage

5. How can a company achieve a differentiation base competitive advantage? Ans: Competitive advantage is a set of unique features of a company and its products that are
perceived by the target market as significant and superior to the competition. It is the reason behind brand loyalty and why customer prefer one product or service over another. There are different types of differentiation base competitive advantages that companies can actually use. Below described about them. 1) The company must try to adopt those differentiation approaches that would be hard or expensive for the competitors to copy. However, strong competitors might be able to clone any feature of a product over a period of time. For example, when Nokia introduced video camera and internet capabilities in the mobile sets, Samsung and LG followed the suit. 2) Differentiation has to be linked to core competencies, unique competitive capabilities, and superior management of value chain activities. The basis for a companys product differentiation would be sustainable if the competitors cannot readily match their competencies with those of the company. Sustainability can also be archived if competitors cannot manage the value chain activities as uniquely as the company itself. 3) A company may ensure sustainability of differentiation when it can base its differentiation on new product innovation, technological superiority, quality, reliability, unique competitive capabilities and superior as well as comprehensive customer service. This issue is very important because it would be tough for the competitors to easily copy these differentiating attributes. 4) The differentiation attributes must be of value to customers. A particular differentiating attribute may seem to the company very valuable and appealing, but if it is viewed by customers as having no or little value, the differentiation strategy will never sustain.

6. State the shortcomings of differentiation strategy.

Ans: Differentiation of a product may not always result competitive advantage in a market.So company must be aware in differentiating product. The common pitfalls and mistakes in pursuing differentiating strategy include: 1. Attributes with little value: While differentiating a product the company may fail to adequately consider the buyers perspective in terms of value of the attribute. If buyers consider that the changed attribute is of little value to them, differentiation strategy will fail. 2. Easy to copy: Differentiation strategy will fail if the competitors can quickly copy or imitate the differentiated features. In that case, buyers will find no difference among the products of competitors. 3. Inability to benefit buyers: Differentiation does not work when buyers perceive that it could not reduce their cost or increase their well-being. 4. Over-differentiation: Over-differentiation occurs in a product when differentiation leads to much higher price than the competitors, or differentiation causes product quality to exceed buyers needs. 5.Failure to understand buyers: Differentiation will obviously fail if the company cannot understand what buyers consider as of value. Every differentiation must be done based on buyers view point not the view point of the company. 6.Buyers satisfaction with basic product: When buyers are satisfied with a basic product, differentiation strategy may fail. Because buyers dont like to have any extra attributes in the products that will increase price. Company must aware of those points in differentiating a product .

7. Discuss the market situations where the best-cost strategy works best?
Ans: Some factors affect the successful implementation of best-cost strategy. These marketrelated factors need to be attended properly by the marketers. Below stated most influential market-related issues where best-cost strategy work best. 1. Buyer diversity: Best-cost strategy will work very well in a market where product differentiation becomes the norm because of buyer diversity, and also a substantial number of buyers are sensitive to price and quality. 2. Positioning advantage: A company with best-cost strategy can position itself near the middle of the market with a medium-quality product at a below-average price, or with a very good product at a medium price. Many buyers may prefer mid-range products. They avoid cheap, basic products of low-cost producers. They also avoid expensive products of top quality. 3. Resources and capabilities: Best-cost strategy will work best when the company has the resources, know-how and capabilities to incorporate upscale product attributes at a lower cost. This strategy is ill-advised if the resources and capabilities do not permit the company to manage costs down and product caliber up.

SET-B

1. What are the reasons for which the need for cooperative strategies has been heightened in the recent years? Ans: Cooperative strategy is a strategy in which firms work together to achieve a shared
objective. Business level cooperative strategies used to grow and improve firm performance in individual product markets. Cooperative arrangements include inter-organizational alliances, joint ventures, federations, constellations, networks, vertical buyer-supplier relations, franchises, community service collaborations, public-private partnerships, corporate board interlocks, etc.) In the recent years,the need for cooperative stratigies has been heightened because of the following

1.Intensified competition in the domestic market 2.Opening up of vast market in different parts of the world(especially in the Eastern Europe and South-east Asia) 3.Advances in telecommunication and information technology 4.Development of transportation across the world by roads,air and sea 5.Globalzation of Busoiness 6.Trade liberalization in many countries since the emergence of the World trade Organization

2. What are the reasons for the formation of Strategic Alliances?

Ans: Alliances can be found in all types of industries and between large and small firms. Firms seek alliances for various reasons. They enter into them to obtain advantages, which on their own, they cannot get. Firms enter into strategic alliances for many reasons. The major reasons for strategic alliances, within a country and outside the country, are as follows: Within National Boundary: 1. To avoid more costly process of building own capabilities by a company to access new opportunities. 2. To substantially improve competitiveness. 3. To collaborate on technical or development of a new product. 4. To overcome deficits in their technical and manufacturing expertise. 5. To acquire altogether new competencies. 6. To improve supply chain efficiency. 7. To gain economies of scale in production and distribution. 8. To improve market access through joint marketing agreements. 9. To open up expanded opportunities in an industry through collaboration with partners. Outside the National Boundary: 1. To build a market presence in the foreign markets. 2. To capitalize on technological and in formation age revolution through collaborative partnerships with other sound companies. 3. To assemble more diverse skills, resources, technological expertise and competitive capabilities than a company can assemble alone. 4. To gain access to technology and expertise in a cost-effective way. 5. To bundle competencies and resources across the counties that are more valuable in a joint effort than when dept separate. 6. To acquire valuable resources /capabilities through alliances that a company could not other wise obtain on its own. 7. To gain inside knowledge about unfamiliar markets and cultures in foreign counties. 8. To access valuable skills(such as manufacturing skills, fashion design skills, software design skills) that are concentrated in particular countries.

3. What are the difficulties that may arise when two or more firms form joint venture?
The newly formed partnerships among business entities don't really have an easy time adjusting to the changes brought about by the joint venture. As a result, these entities engage in activities that are somehow resisting to changes.

Let us discuss some of the major difficulties with this strategy: 1. Complicacies arise in dividing the share of control between the partners. The partners in joint venture may have controversies over the role each would play in the organization and also over the extent of control in the organizational affairs. 2. The partner-companies run the risk of giving technical know-how away to their counterparts. Any partner may capitalize on that know-how to compete directly with the other partner. 3. Conflict over how to run the joint venture can tear it apart and result in business failure. 4. In the case of international joint venture, conflicts may arise over the use of local resources, local technology, local employees, compliance with local standards and policies, export volume, operating procedures, use of intellectual property and technology, use of foreign partners technology by local partner, etc. 5. Disputes may stem when foreign partners start neglecting the local partner after the foreign partner has overcome the difficulties. In that case, foreign partners may even think of dissolving the joint venture. 6. Local partners may start own business by seceding their relationship with joint venture when they could master the technology and develop competitive skills. Capitalizing on their acquired know-how, they may launch their own product in separate brand names. 7. The joint venture firm may begin to compete more with one of the partners than the other when all partners are in similar business. 8. Problems may arise when the sponsoring firms do not provide support to the joint venture equally. 9. Although the partnering companies may not have problems, they may face problems due to complaints from the customers about poorer service or about other issues.

4.Discuss the purpose of both merger and acquisition strategies.

Answer:

There are several purposes of mergers and acquisitions. Some of these are business purposes and some are political. But the general purposes of mergers and acquisitions are to generate more profit for the newly built companies and to diversify their operational domains. At the same time,
expanding the company's business in different geographical regions is also a reason of mergers and acquisitions.

The purposes of merger and acquisition are primarily similar. They can-

Dramatically strengthen a companys market position Open new opportunities for competitive advantages. Fill resource gaps and allow the new company to do things which the prior companies could not do alone. Combine the skills and competitive capabilities of the merged companies. Achieve wider geographical coverage and greater financial resources Add production capacity and expand into new areas, and/or Ensure considerable cost-saving through combining operations of a number of companies.

5. Distinguish between merger and acquisition. Ans: The differences between merger and acquisition are given below:

Merger 1. Merger takes place when two or more organizations merge together and their operations are absorbed by a new organization. 2. Where two or more organizations agree to integrate their operations a relatively coequal basis. 3. After having been merging red the companies loose their independent identities. 4. When combined together, a new company is created. The partnering companies are dissolved. 5. A recent example of national merger is the merger of Bangladesh Shilpa Bank (BSD) and Bangladesh Shilpa Rin Sangstha (BSRS) both are govt. owned specialized financial institutions.

Acquisition 1. An acquisition occurs when one company purchases or acquires another company.

2. Where one firm buys a controlling or 100% interest in another firm.

3. After acquisition the acquired companys legal identity is lost.

4. The acquirer company remains independent and operates its business as it is.

5. For example, In 2003-04, Yahoo! Acquired INKOMI corporation and oracle acquired people soft; etc.

6.Why do some companies follow backward integration strategy? Answer: Backward Integration is an approach of a company to increase its level of control on its inputs. It is a part of the Corporate Strategy which is defined as the match an organization makes between its internal resources and skills and the opportunities and risks created by its external environment. Backward integration for a firm is need for The firms present suppliers are especially expensive, or unreliable or incapable of meeting the needs. The number of suppliers is small. The firm is competing in an industry that is growing rapidly. The firm has the resources to manage the new business of supplying its own materials. Advantages of stable prices are particularly important. The firm needs to acquire a needed resource quickly.

7. Compare and contrast between first-mover and late-mover strategy. Ans: The first-mover and late-mover strategies are basically related to timing of strategies moves by an organization. Determination of the timing of strategies moves is important for every business organization. A firm may be first mover in launching a strategy to gain competitive advantage in the market place or the firm may wait and be a late-mover to avoid risk. Contrast between first-mover & late-mover:

First-mover strategy 1. First mover strategy builds reputation in the market place. 2. It attracts buyers to the products and the firm. 3. Creates a pool of loyal customers. 4. The first mover can not copy technology, because it is an innovative strategy.

Late-mover strategy 1. Late-mover strategy does not build reputation in the market place. 2. It is high costly to become the first mover.

3. Does not create a pool of loyal customers. 4. The late mover can copy/imitate the technology how easily and eventually achieve market.

Conclusion
To sum up it is clear that a business-level strategy is an integrated and coordinated set of commitments and actions that firms use to gain a competitive advantage by exploiting core competencies in specific product market. The business level strategy of the organization outlines the methodologies of the organization regarding competing with rival firms in the market Only firms that continuously upgrade their competitive advantages over time are able to achieve longterm success with their business-level strategy. Different types competitive strategies help company to maintain effective management of customer relationships. Customers are the foundation or essence of an organization's business-level strategies. Business level strategy is the firm specific strategy that facilitates in gaining competitive advantage in the market. An organization's core competencies should be focused on satisfying customer needs or preferences in order to achieve above average returns. This is done through Business-level strategies. Business level strategies detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service

markets. We reviewed the concept of competitive advantage and a number of the general strategies a firm may adopt based on Porters approach. His approach offered a useful support for analyzing competitive forces and formulating generic business strategies. Besides successful competitive strategy focuses on assessing the unique strengths, identifying growth opportunities, collecting competitive intelligence, and responding to competitive threats. It effectively supports companys top-line growth objectives by helping company develop a differentiated and sustainable competitive position.