Typical (basic) strategies. Typical competitive strategies of an organization Typical business strategies

Historically, most of the best-known modeling tools strategic management were developed approximately according to the following logical scheme. Potentially effective corporate strategy(the overall strategy of the holding structure) is mainly the result of a series of correct standard solutions, including choice of one alternative from a given set model strategies for each specific business of a given corporation (holding structure).

BCG model

Scheme 3.6.5 for a given strategic perspective shows: the solid line is priority investment directions from dairy cows; and the dashed line desirable for holding structure evolution difficult children and stars.

Consequently, bcg Model, First of all, each specific holding structure helps to solve two typical strategic issues:

1) achieving what market position need to put as a strategic goal for this business in a given strategic perspective;
2) in which specific businesses during this strategic period direct investments, which, among other things, are formed at the expense of income from other specific businesses.

BCG Model offers the following typical set of strategic decisions for specific businesses, depending on whether they fall into the Goth or another quadrant of the matrix.

1. "Stars" it is required to protect and strengthen, i.e. the share of the relevant business in a given market in a given strategic perspective should be maintained or increased.
2. "Cash cows"it is necessary to protect, strictly control and, of course," milk ", i.e. for such businesses for a given strategic perspective, special optimal investments (necessary only to maintain this business) should be established and tightly controlled; and the relative excess of cash (Cash flow) from such businesses to direct the development of other businesses.
3. "difficult children" should be studied specifically, i.e. on similar businesses in a given strategic perspective in accordance with characteristic features specific situation, it is possible: or through targeted investments, try to transfer some business into "stars", or to keep the existing market share, or it is profitable to sell this particular business (reduce to the optimal size).
4. From "dogs" it is necessary to get rid of, i.e. relevant businesses in a given strategic period are either reduced or, as a rule, liquidated (unless there are some special reasons for their preservation).

Applying BCG model, " stars"burn it up." cows"take care and milk." difficult children"raise to" stars", a " dogs" chase.

Quite a wide and long practice of using BCG models revealed both its pluses and minuses, and also determined quite clear boundaries of its application. Since the situation with restrictions on the use BCG models is typical for all other similar models, then we formulate the general matching rule.

Match rule.Every specific situation First of all, you should be very careful verify for compliance all the prerequisites of this generic model ; if at least one will appear such a discrepancy, then the model application is not recommended.

Scheme 3.6.5. MatrixBCG

Let's comment on this rule with an example BCG models.

To the prerequisites or restrictions BCG models primarily include the following.

1. The strategic prospects of all specific businesses of a given company must be commensurate in terms of growth rates.

At a minimum, this requires:

– firstly, that for all businesses the relevant products in the considered strategic perspective remain in the same phases of their life cycle;
- secondly, in a given strategic perspective, all significant factors of the uncertainty of the external environment are excluded, which can change the already set trajectory of the growth dynamics of the corresponding business in the corresponding specific markets.
2. In this particular business, in the considered strategic perspective, the development of competition should take place in such a way that, in order to determine the future market position, it would be sufficient to know the values of only one indicator of the relative market share according to the BCG model.

In this way, if in your specific situation over a given strategic perspective, growth in the size of the relevant demand-driven market can be a reliable measure possible development your specific business and at the same time a competitive position your holding structure can be estimated by its share in this market, then apply bcg Model, which is good for its simplicity and clarity.

But if a given strategic perspective is presented much more complex and (or) the relevant conditions of competition also appear to be significantly more complex then don't use classic BCG model. That is other tools needed and strategic analysis, and strategic synthesis; in general, a different model is needed to build (develop) a common strategy for a set of businesses your holding structure. BCG models the following sources are recommended: [Ansoff, 1989]; [Thomson Jr., 2013]; [Kotler et al., 2012]; ; .

A variety of approaches to the development of corporate strategy

Corporate strategy - how a complex system– may have several significantly different conceptual constructions based on their key subsystems. In these paragraphs, 3 logics of such constructions are reflected in relatively detail both in the design-analytical and in the activity-practical aspects.

Firstly, of all the strategies of the main subsystems of the organization, one key strategy (product marketing) is singled out, through which - in many respects it is set and essentially determined - the entire process of working all other private strategies of the organization, as well as its corporate strategy as a whole.

This logic of building a corporate strategy can be called logic primary allocation leading key strategy-subsystem with subsequent derivative construction on its basis of all other strategies-subsystems, as well as corporate strategy - as a system as a whole.

Secondly, at the present stage, one of the most effective constructions of a corporate strategy is the creation of an effective system of effective strategies for individual businesses of an organization.

Thus, the second logic of corporate strategy formation is the logic of the strategy system of individual businesses.

Thirdly, understanding of corporate strategy as a set of strategies for the main functional areas of the organization.

In other words, the third logic of corporate strategy is the logic of building a system of functional strategies.

In connection with the foregoing, it should be noted that there are other logics or principles of both the initial division (analysis) and the subsequent reunification (synthesis) of a corporate strategy.

So, in parallel with the above, the so-called "resource approach" to corporate strategy.

In addition, not only popular, but, according to many experts, - very productive and promising - is a concept that suggests creating a corporate strategy, first of all - based strategies of the main elements of the so-called « core competence» organizations.

It is necessary to highlight only 2 more fundamental positions.

1. The two additionally named logics (approaches), as well as all other unnamed ones, are in themselves no worse and no better than the three previously presented logics for building a corporate strategy.

2. In Russia, compared to all other concepts, the functional approach is relatively more well-known.

Taking into account these positions, in relation to the development of corporate strategy and strategic management in general, it is necessary to emphasize the following:

1) according to the criterion of final efficiency, an overly absolutized or traditional functional approach has its own significant internal limitations;

2) therefore - to win in modern competition in one or another strategic perspective - It is expedient to supplement the traditional functional-strategic approach with various other methodological approaches and appropriate methods for constructing effective strategies.

In this context, polyphony in the development of a corporate strategy becomes not only realistically possible, but most importantly, very useful and effective.

Reasonable sufficiency or the principle of "Occam's razor" for strategy

Specific commercial organizations that actually operate in various specific situations, is a great many.

Consequently final choice– both in terms of the principled approach and specific tools – have to do it yourself.

Therefore, this choice:

firstly, it must necessarily be based on a very serious analysis of your particular situation;

Thus, a kind strategic optimality- this is the ability to combine reasonable sufficiency in terms of the effectiveness of the strategy with a relative minimum in terms of efforts and, in general, in terms of the total costs of its creation.

Organic corporate strategy

Between the corporate strategy and its operational-tactical implementation, there must be an effective organic transition. Corporate strategy as "development" - must be organic design integrity; but as a long-term program of concrete actions, it has such integrity and organicity - should show the world practically; etc. That is why it is necessary to emphasize the following two positions.

1. Achievement really complete, those. all-encompassing and end-to-end organic corporate strategy both in all its subsystems and elements, and in all processes of its development - this is a mandatory essential requirement for the strategy of modern commercial organization.

Such a requirement is set by the objective trends of modern competition - in almost any business area.

2. Initial corporate strategy and overall primary model strategic management– of any Organization – must be sufficiently effective. And at the same time (and in some specific situations - especially) they can remain relatively simple. But in the future, the long-term trajectory of the movement of a modern commercial organization should be determined by the adequate development of its overall strategy.

That's why modern corporate strategy , how the most general strategy of the organization, under the influence of already occurring, as well as possible changes in an uncertain and constantly becoming more complex external environment, obliged itself continuously, flexibly and change appropriately. that is, to develop relatively independent and truly complete organic system.

Basic competitive strategies

M. Porter presents three types common strategies aimed at increasing competitiveness. A company that wants to create a competitive advantage for itself must make strategic choices in order to "not lose its face."

For this, there are three basic strategies:

1) leadership in cost reduction;

2) differentiation;

3) focusing ( Special attention).

To satisfy the first condition, a company must keep costs lower than those of its competitors.

To ensure differentiation, it must be able to offer something unique in its own way.

The third strategy proposed by Porter suggests that the company focuses on a certain group of customers, a certain part of the product, or in a certain geographic market.

There are only two ways to achieve optimal performance: either you become the lowest cost producer in your industry, or you differentiate your products/services in ways that are valued by the customer to the point where he will pay the highest price to get them. Firms can choose whether to apply these strategies to a broad market or to a narrow market segment where their activities are focused.

Model Strategies

Typical situations

Comprehensive organization strategy

1. Commodity market strategy - a set of strategic decisions that determine the range, volume and quality of products and ways of the enterprise's behavior in the commodity market.

2. Resource-market strategy - a set of strategic decisions that determine the behavior of an enterprise in the market of production, financial and other factors and production resources.

3. Technology strategy - strategic decisions that determine the dynamics of enterprise technology and the influence of market factors on it.

4. Integration strategy - a set of decisions that determine the integration functional and managerial interactions of an enterprise with other enterprises.

5. Financial and investment strategy - a set of decisions that determine the ways of attracting, accumulating and spending financial resources.

6. Social strategy – a set of decisions that determine the type and structure of the team of employees of the enterprise, as well as the nature of interaction with its shareholders.

7. Management strategy - a set of decisions that determine the nature of enterprise management in the implementation of the chosen strategy.

Recently, many enterprises have been restructuring their internal production, technological, organizational and managerial structure, redistributing the rights and responsibilities of various departments and subsystems. In this regard, it seems appropriate at this stage of economic development to single out an additional section of the strategy.

8. Restructuring strategy - a set of decisions to bring the production-technological and organizational-managerial structure in line with the changed conditions and strategy of the enterprise.

It should be noted that the basis of the company's comprehensive strategy is the commodity-market (product-marketing) strategy.

Product marketing strategy

Product marketing strategy is a subsystem of corporate strategy that aims to for the analysis, development and adoption of a set of strategic decisions in the area of nomenclature, assortment, quality and volume of production of products organizations, as well as sales of products in the respective markets.

Primary level of product marketing strategy

A product marketing strategy should, at a minimum, answer the following key questions:

1. What are the products will be produced and sold by the organization?

2. To whom Will the organization's products be sold?

3. Where(in which regions and locations) will the organization's products be sold?

4. How are the prices on products organizations compete now and will compete with the prices of the corresponding analogues?

5. How organization sets prices on its products: is it a price leader or sets them after competitors?

6. What is the strategy organizations in areas of promotion and distribution of their products in their respective markets?

Product analysis of development (reformation) of commercial

organizations

Product marketing strategy/program

Typical models of business strategies

It so happened historically that most of the most well-known model strategic management tools were developed approximately according to the following logical scheme: an effective corporate strategy is mainly the result of a number of correct standard strategic decisions, including the choice of one alternative from a given set of standard strategies for each particular business of the organization.

Comparison of growth rates and market share (BCG model)

The first model of corporate strategic planning is considered to be the “growth-share” model, which is better known as the BCG model. This model is a mapping of the position of a business in a strategic space defined by two coordinate axes, one of which is the growth rate of the product's market, and the other is the relative share of the company's products in the market for this product.

(GE/McKincey model)

The focus of this model is future profit and the future return on investment that the firm may receive. All types of the company's business are ranked in terms of receiving additional investments in terms of quantitative and qualitative parameters. Moreover, not only current sales volumes, profit and return on capital are considered, but also other factors: the volatility of market share and technology, staff loyalty, the level of competition, and social need.

The GE / McKincey matrix has a dimension of 3x3. The axes are the attractiveness of the market and the relative advantage of the corporation in the relevant market.

The matrix identifies three areas of strategic positions:

1) area of winners;

2) area of losers;

3) middle area.

The types of businesses that fall into the “winners” area have better or average values of market attractiveness factors and company advantages in the market compared to the rest.

The "middle" area includes positions that consistently generate profit from the business, the average business positions are dubious types of business.

The “losers” include those types of businesses that have at least one of the lower and do not have any of the higher parameters plotted on the axes.

Comparison of market attractiveness and competitiveness

(Shell/DPM model)

This model is a two-dimensional matrix, where the axes reflect the strengths of the enterprise and industry attractiveness. The matrix is divided into 9 cells, each of which corresponds to a specific strategy. Available positions:

business leader;

growth strategy;

cash generator strategy;

strategy for strengthening competitive advantages;

continue business with care;

partial phasing out strategy;

double production or wind down the business;

continue business with caution or partially curtail production;

business exit strategy.

Market evolution analysis (Hofer / Schendel model)

This model focuses on positioning existing businesses on the product market development matrix, identifying an ideal set of these businesses, and developing ways to form such an ideal set.

In principle, there are two optimal sets: buying a new (and/or strengthening an existing) type of business, or selling (and/or weakening an existing) type of business.

In their model, Hofer and Schendel propose three types of ideal business suite at the corporate level:

1. Growth kit.

2. A set of profits.

3. Balanced set.

In doing so, corporations may aim to achieve one set of three.

The matrix has a dimension of 3x3. On one axis, the stages of market development are displayed: market development, growth, displacement of the old product from the market, maturity and saturation; on the other axis - the relative competitive position of the type of business within the industry: strong, medium and weak.

Depending on the position of the type of business, there are generalized strategies:

strategies for increasing market share;

growth strategies;

profit strategies;

market concentration and asset reduction strategy;

promotion or shift strategies;

liquidation and separation strategies;

The Hofer/Schendel model is primarily designed to balance the corporate business portfolio. Also, the model can be used to analyze competitors, both at the corporate and business levels.

The basic theoretical assumption of this model is the assumption that there is a typical industry life cycle or product market development curve. At the same time, this curve, in fact, is similar to the sales volume curve.

Industry Life Cycle Analysis (ADL/LC Model)

The main theoretical position of this model is that a single business of a corporation can be at one of the stages of the life cycle, and, therefore, it must be analyzed in accordance with this stage.

The matrix consists of 20 cells. The axes represent 4 stages of the life cycle and 5 competitive positions. Depending on the position of the type of business on the matrix, a carefully thought-out set of strategic decisions is expected.

The basic concept is that a corporation's business portfolio should be balanced. This portfolio has the following features:

1. Types of business are in different stages of their life cycle.

2. Cash flow is positive.

3. The weighted average rate of return on net assets(RONA) for all types of business satisfies the goals of the corporation.

4. The more types of businesses that occupy a leading, strong or favorable position, the better the corporation's business portfolio.

Definition of a strategic position

To determine the strategic position, the method of approximate calculation is used. According to this methodology, the strategic positions of the organization are determined by the degree of compliance with the development strategy, macro conditions, micro conditions, market conditions and industry conditions.

The macro conditions under which the strategy is supposed to be implemented include, first of all:

social conditions;

political conditions;

economic conditions;

technological conditions.

The microconditions of the strategy are formed by the following organization systems:

production and technological system;

financial and economic system;

control system;

production preparation and marketing system;

corporate culture system.

Industry conditions for the implementation of the strategy are formed under the influence of:

structure and dynamics of the competitive environment of the industry;

threats of potential competition;

position of buyers in the industry;

position of suppliers in the industry;

pressure from manufacturers of substitute products.

Market conditions for the implementation of the strategy are determined by:

potential (size) of the market;

market structure and potential segment;

market age;

elasticity of demand;

key success factors in the market.

Functional Strategies

Production strategy

for the period of t-year corporate strategy

Comparative characteristics of strategy types

Competition is the rivalry between commodity producers for more favorable conditions for the production and sale of goods in order to obtain the maximum possible profit on this basis. Competition is the most effective method economic control, as it costs society minimal costs.

Competitiveness of the organization - the ability to implement effective economic activity and its profitable implementation in a competitive market. Competitiveness as a phenomenon is a combination of quality and cost characteristics that ensure the satisfaction of a specific need.

As an example, in fig. 1. A graphical model for comparing the competitiveness indicators of two organizations in eight parameters is given.

Rice. 1. Orientation of competitiveness

The combination of different products on the market and different consumer orientations allows us to talk about some types of competitors, the main of which are given in Table. one.

To conduct competitor analysis, it is necessary to identify all real and potential competitors and consider them in terms of possible strategies; current position; financial opportunities; entrepreneurial philosophy and culture, and goals.

The study is carried out in three stages, which involve:

identification of current and potential competitors;
analysis of indicators, goals and strategies of competitors;
identifying strengths and weaknesses competitors.

According to P. Doyle's classification, groups of direct competitors using a cost leadership strategy seek to conquer the market with the help of low prices by minimizing all types of production and sales costs. The efforts of the differentiation group are aimed at satisfying to the greatest extent the needs of consumers in terms of the main parameters of the product.

Table 1. Types of competitors

The focus group concentrates its efforts not on the market as a whole, but on its segments, where competitors seek to win over the buyers of the first two groups. However, indirect competitors with their substitute products or similar services often pose no less danger to the organization. In addition, over time, competitors acquire the knowledge and experience that allows them to move into the strategic group occupied by the organization and become direct competitors.

Rice. 2. Strategic groups of direct competitors: A, B, C, D, E, E - competitors

Identification of competitors is carried out on the basis of one of the approaches.

The first approach is associated with an assessment of the needs satisfied in the market by the main competing firms, the second one focuses on the classification of competitors in accordance with the types of market strategy used by them.

In the first approach, competing firms are grouped according to the type of needs that their product satisfies. In the second case, competitors are classified according to key aspects of their orientation in production and marketing activities.

Strategic directions of competition

Competitive advantage is formed as a result of the implementation of one of the competitive strategies: cost leadership, differentiation strategy, optimal costs and focusing. There are two ways to establish cost advantage: 1) do a job better than the competition; 2) correct the structural and functional indicators of costs - value chains (hereinafter - ts).

In a compact form, the necessary information is presented in Table. 2.

Table 2. Factors that determine cost leadership

Cost management

Influence of management

Improving value chains

Cost Leadership Protection

Structural components

Economies or losses of scale can be identified or created anywhere along the value chain

The effect of the learning curve and experience (by increasing labor efficiency; creating product modifications that increase production efficiency; retrofitting machine park; obtaining private information from suppliers, consultants and former employees competing firms)

Relationship with other activities in the value chain. For example, to identify those moments where both suppliers and companies have high costs, since there is no coordination and joint optimization

Sharing of opportunities between different production units within the organization (economy of scale in production, reduction of time to create a new technology, etc.)

Increase / reduce the number of products offered

Add / cut services provided to customers

Contribute more/less distinctive features to product quality characteristics

Pay more/less employees relative to competitors in similar industries

Increase / reduce the number of different distribution channels for marketing the company's products

Simplify product development, remove redundancies

Reengineering of the main production processes

Use of smarter technology

Sales use end user and marketing approaches, which cut unnecessarily, large costs and profits for wholesalers and retailers (often 50% of the final price paid by the buyer)

Transfer of production facilities closer to the consumer/supplier

Cost leadership puts you in the best position to attack, defend, increase sales or gain market share

Countering the power of buyers, a low-cost company often maintains profit margins

A low-cost company is best protected from supplier dictate if the basis for its competitive cost advantage is better internal organization.

Benefits vertical integration compared to moving certain types of activities outside the company (giving significant trade power, reducing costs at the joints)

Dependence on geographical location (the level of salaries of employees, the amount of taxes paid, the cost of energy, the cost of obtaining and shipping products, chartering)

Functional components

Advantages and disadvantages of early adopters (trademark and incremental costs)

Capacity utilization percentage

Strategic choices and production decisions

Increase / decrease the level of R&D relative to competitors

Spend more/less effort to increase productivity and efficiency relative to competitors

Increase/reduce specifications for purchased materials

Achieving a greater economic level of vertical integration compared to competitors

Implementing a “something for everyone” approach and focusing on a limited set of products/services to meet specific but important customer requirements and eliminate unnecessary steps and costs associated with a large number of product modifications

From the point of view of potential market participants, the cost leader can lower the price to make it more difficult for newcomers to win customers. In competition against substitute products, the cost leader is well positioned, because the use of low prices is a good defense against companies trying to introduce similar products to the market.

Characteristics of typical competitive strategies

Low strategy costs are especially important in the following cases:

price competition among sellers is particularly strong;
the product produced in the industry is standard;
differences in price for the buyer are significant;
most buyers use the product in the same way;
the cost of buyers to switch from one product to another is low;
there are a large number of buyers who have serious power to lower the price.

Risks of the strategy to achieve low costs: technological breakthrough of competitors; simple ways copying the skills of a cost leader; excessive focus on cost reduction and blindness to other areas; change in customer preferences and the desire for better quality goods; short circuit vulnerability in a given technology.

Differentiation strategy becomes attractive as customer preferences diversify. The company must study the requests and behavior of customers. Competitive advantage arises when a large number of buyers will be interested in the proposed attributes and characteristics of the product.

Successful differentiation allows the firm to charge a higher price for the product; increase sales; gain customer loyalty to your brand.

Varieties of differentiation schemes: distinctive taste qualities, specific properties, delivery of small postal items, product delivery within 24 hours, more value for money, prestige and distinctiveness, workmanship, technological leadership, full-scale service, the highest image and reputation. Differentiation is attractive because:

creates entry barriers;
smooths out the influence of the power of buyers;
helps to avoid the threat from substitute products.

Differentiation works best in markets where there are many ways to change the product and the buyer recognizes these differences as having value; the needs of the buyer and the ways of using the goods are different; a small number of competitors take a similar approach to differentiation.

Risks of differentiation strategy. If the buyer sees little value in uniqueness, then the cost strategy will win. In addition, competitors can copy all the innovations.

Optimal cost strategy. The strategy is focused on giving customers "more value" for their money. This implies a strategic focus on low costs while providing the customer with more than the minimum acceptable quality, service, features and attractiveness of the product.

The strategic goal is to become a low-cost, good-to-excellent product manufacturer, and then use the cost advantage to drive down the price of similar products produced by competitors.

The strategy is attractive in terms of competitive maneuvering. An optimal cost company may offer a mid-range product at a below-average price or good quality at an average price.

Focused Strategy low costs and differentiation focused on a narrow part of the market. The goal is to do a better job of serving customers in the target segment.

A focused low cost strategy is associated with a market segment in which buyers' demand for cost (and hence price) is significant in contrast to the rest of the market space. Costs are reduced by using trademark(no advertising, marketing costs), targeting clients who do not research the market (do not pay for consultations).

Focusing works well when a company finds ways to cut costs by limiting the number of buyers in order to well define its niche. Focusing is useful when:

the segment is too big to be attractive;
the segment has good potential for growth;
the segment is not critical to the success of most competitors;
a company using a focus strategy has sufficient skills and resources to successful work on the segment
a company can protect itself from challenging competitors through customer benevolence and its superior ability to serve segment buyers. Risks of a focused strategy: there is a possibility that competitors will find an opportunity to approach the company's actions in a narrow target segment; the requirements and preferences of consumers of the target market segment are gradually spreading to the entire market;
a segment can become so attractive that it attracts the attention of many competitors.

Strategic advantages of vertical integration. If vertical integration does not lead to significant cost savings or additional benefits, then it is not strategically justified.

Backward integration results in cost savings when the required production volume is large enough to produce the same economies of scale as those for suppliers (and vice versa). It also reduces the company's dependence on suppliers.

Forward integration creates a network of committed dealers representing the company's products to the end user (this can result in cost savings).

For producers of raw materials, integration into production can promote greater product differentiation and help avoid price competition with other producers of raw materials.

However, the closer the supplier is to the activities of the manufacturer, the more opportunities the company has to break out of this competitive environment and differentiate the final product due to design, service, quality, packaging, etc.

Strategic disadvantages of vertical integration:

increases investment in the industry, technologies are conserved;
limits the firm in the freedom to choose suppliers;
requires balancing capacities at each stage in the value chain (when the production capacity of one of the links exceeds the needs of another, the surplus must be sold);
requires different skills, business abilities and the ability to analyze the situation;
integration with parts manufacturers can reduce a company's manufacturing flexibility (frequent changeovers are costly).

So, the integration strategy has both strengths and weaknesses. The choice depends on the following:

1) whether integration can improve the strategically important areas of the company's work in the direction of costs or increase differentiation;

2) how it affects capital costs, flexibility and responsiveness, administrative costs;

3) is it capable of creating competitive advantage.

Structural analysis of competitors' activities is part of common system evaluation and is carried out in such a way that the forms and methods of the competitors' product policy are clarified; dynamics of price changes of competitors; analysis of means of stimulating sales of competitors.

The most important parameter of competitiveness is the quality of goods. Quality is the totality of properties and characteristics of a product that gives it the ability to satisfy stated or implied needs.

This and other parameters of competitiveness allow us to evaluate the organization under study in comparison with competitors. An example of such a comparison is given in Table. 3. Strategic assessment of the company's external environment requires an answer to seven questions. These questions are listed below.

Table 3. Identification of the strengths and weaknesses of the organization in comparison with competitors

Characteristics of competitiveness	Competitiveness Characteristics Parameters	Parameter estimates
		organizations	competitors
		organizations
Marketing Benefits	Market share Product quality Service level Efficiency of customer contacts Ways of distribution of goods Geographical features of the market
Financial stability	Business profitability analysis Motion Analysis Money Analysis of current debt
Efficiency	Cost level Production capacity data Staff technical skills Supply options
Organizational Capabilities	Leadership Potential Employee motivation Ability to adapt Entrepreneurial ability

Factors affecting the situation in the industry

1. What are the main economic indicators of the industry?

Industries differ widely in characteristics such as market size, extent of competition, market growth rates, number of buyer (seller) firms and their relative size, difficulty in entering and exiting the industry, degree of vertical integration of sellers, rate of technological changes. These indicators also include the size of economies of scale and the effect of the experience curve, the degree of standardization or differentiation of competitors' products, profitability (profitability).

Factors that need to be studied to determine the main characteristics of the industry:

market size;
the extent of competition;
the growth rate of the market and the stage at which the market is located;
the number of competitors and their relative sizes;
the number of buyers and their financial capabilities;
integration is directed "forward" or "backward";
directions and pace of technological change;
ease of entry into and exit from the industry;
products of competing firms are highly differentiated or almost identical;
whether companies have the opportunity to realize economies of scale in production, transportation, marketing when conducting promotional activities;
whether a high degree of capacity utilization is the most important condition for achieving a low level of production costs;
whether the industry's learning-experience curve is such that the average price of a product falls as cumulative output rises;
whether the necessary investments are being made in the industry;
whether the industry is above or below the average profit margin as a whole.

Example: a set of key economic indicators and the strategic importance of key economic characteristics of an industry.

2. What competitive forces are at work in the industry and what is their impact?

The level of competition is determined by five forces: rivalry between sellers within the industry, the presence of the attractiveness of substitute products, the possibility of new competitors entering the industry, the influence of suppliers, and the ability of consumers to dictate their terms. The task of analyzing competition in an industry is to assess each force, determine the degree of its pressure, and then analyze the competitive strategy that a company should focus on, taking into account the existing “rules” of competition in the industry, which aims to:

a) Isolate the firm as far as possible from the five forces of competition.

b) use the "rules" of competition in the industry for the benefit of the firm;

c) gain a competitive advantage.

Five forces model:

1. Rivalry between sellers:

low prices;
improved product characteristics;
service level;
terms of the warranty period;
ways to promote the product to the market;
new goods (all resources and the strength of competition).

Competition Intensity Factors:

number of firms;
growth in demand for products;
lower prices, increased sales, reduced inventory;
costs of buyers for change of firms;
dissatisfaction of some companies with market shares;
industry profitability;
the cost of exiting the industry;
swinging the market due to the difference of companies;
buying up big company another industry outsider who could become an industry leader.

2. Entry into the industry of new competitors (barriers):

economies of scale in production (it is difficult to produce large volumes at once, risk, overproduction);
impossibility of access to know-how and technologies (special knowledge and experience are needed);
learning curve effect (production experience);
consumer commitment to brands (discounts, quality, service);
the size of capital investments (% on loans, winning a client);
cost inequality (cheap raw materials, know-how, experience curve, geography, % credit);
access to sales channels (wholesale, retail, advertising, dealers);
actions of regulatory authorities (licensing, environmental protection);
tariffs and non-tariff restrictions (government restrictions).

3. The influence of substitute products - competition with firms in another industry:

affordable prices;
product quality and characteristics;
complexity of switching for consumers;
the complexity of retraining employees, technical assistance;
time spent on reliability and quality checks;
psychological costs.

4. Competitive strength of suppliers:

significance for the consumer;
standardization of supplier products;
amount;
the severity of the need;
volume of a consignment of a substitute product;
close relationships with suppliers;
the share of the supplier's products in the production price;
the impact of the supplier's products on quality;
the cost of switching to another supplier;
suppliers' propensity to make concessions;
possibility of vertical integration.

5. Competitive strength of buyers:

size of buyers;
sentence;
impact on prices, quality and service levels.

The strategic meaning of the five forces is the structure of forces and the nature of the struggle.

The structure of competition in an industry is unattractive if the rivalry between sellers is high; market entry barriers are low; competition from substitutes is high; sellers and buyers can benefit significantly from participating in transactions.

Ideal competitive environment: suppliers and buyers are in a weak position; there are no good substitutes; entry barriers are high; competition between sellers is moderate.

The strategy must do the following:

1) isolate the company from the five forces;

2) influence competition in a direction favorable to the firm;

3) secure a strong position in the competitive game.

3. What causes changes in the structure of competitive forces in the industry and the environment?

Driving forces are changes in long-term trends economic growth industries; changes in the composition of consumers; introduction of new products; market entry or exit of large firms; globalization; changing cost structure and productivity; the transition of consumer preferences to standard products from differentiated ones; the impact of changes in legislation and government policy; changing social values and lifestyles, reducing uncertainty and risk.

There are usually 3-4 main driving forces. The driving force analysis aims to:

1) determine which driving forces have the greatest impact;

2) establish the extent and consequences of influence;

3) adapt the strategy to the action of driving forces.

4. Which companies have the strongest (weakest) competitive positions?

To answer this question, a map of strategic groups is being developed. Rivals belonging to the same or closely spaced strategic groups are close competitors.

Algorithm for mapping the structure of groups (Fig. 3):

establish the full range of characteristics (price/quality level, geographical scale of activity, degree of vertical integration, product range, distribution channels used, range of services);
put companies on the map;
to unite the firms which have got approximately in one space;
draw a circle (the diameter is proportional to the share of the group in total sales).

map field variables should not be highly correlated;
variables should show large differences in the positions taken by firms in the competitive struggle;
variables must be neither quantitative nor continuous;
the use of circles of different diameters makes it possible to reflect the relative sizes of each strategic group;
several maps give different representations of competitive positions.

You can draw arrows indicating the movement of groups to other positions.

Attempts by competing firms to enter a new strategic group almost always lead to an increase in the intensity of competition.

The closer the groups on the map are to each other, the stronger the competition.

From the map, you can determine if the differences in potential profitability are related certain categories groups with a strong or weak position of each of them.

Rice. 3. Map of competitive positions in the furniture sales market: the levels of quality-price ratio (Q/C) are marked vertically; horizontally - assortment set in the furniture sales market in Vladimir; the diameter of the circle is proportional to the share in the sales volume; the numbers indicate the furniture sellers

5. What is the competitor's next most likely strategic move?

This analytical step includes determining the strategies of competitors, identifying strong (weak) rivals, assessing their competitive capabilities, predicting their next steps. Well-organized reconnaissance activity to collect information about the enemy makes it possible to predict his actions.

The firm cannot outplay rivals if it does not monitor their actions. It is important to determine the structure of competitors: their position in the industry; goals; basic approaches to the conduct of competition.

a forecast of the next steps of competitors is necessary: an understanding of their strategic intentions; assessment of their position in the market; awareness of how much they need to strengthen their financial position; analysis of public statements; competitor flexibility; understanding the mindset of leadership; reconnaissance activities.

6. What are the key factors for competitive success?

Key success factors (KSF) are the actions to implement the strategy, competitive opportunities, performance that the company must provide in order to be competitive and achieve financial success.

Key success factors are actions and competitive opportunities that need to be given special attention: capacity utilization, distribution network, advertising, level production costs, location of consumers. In different industries, CFUs are different, but there are rarely more than 3-4 of them.

7. Is the industry attractive and what are its prospects for achieving a high level of profitability (above the average in other industries)?

If it is concluded that the industry is attractive, then an aggressive strategy is usually adopted to create a strong competitive position, expand sales and invest in the development of the production base and equipment renewal.

If the industry is relatively unattractive, then:

a) companies outside the industry and considering joining it may decide negatively and start looking for other opportunities;

b) weak companies can merge with competitors or be taken over by the latter;

in) strong companies may limit further investment and focus on cost reduction and/or innovation (new product launch) strategies to improve long-term competitiveness and profitability.

The formation of a strategy in general terms can be defined as the process of developing goals for the development and functioning of an enterprise for a certain period of time, as well as ways to use funds to achieve the goal.

The choice of strategy depends on many conditions: the forms of competition and the degree of its rigidity, the rate and nature of inflation, the economic policy of the government, comparative advantage national economy in the world market and other so-called external factors, as well as internal factors associated with the capabilities of the enterprise itself, i.e. its production and financial resources.

The process of forming an enterprise strategy includes:

§ formation of a general, basic strategy;
§ formation of a competitive strategy;
§ definition of functional strategies.

Development of an enterprise development strategy - a procedure for developing the desired state of the organization: vision, mission, goals (maps of the company's goals and scorecard key indicators effectiveness) and specific measures to use strengths (weaknesses) to achieve opportunities (leveling threats).

Offensive strategy (offensive strategy) - involves an active, aggressive position of the company in the market and aims to conquer and expand market share. Such a strategy is chosen by the company if: 1) its market share is below the required minimum or has sharply decreased as a result of the actions of competitors and does not provide a sufficient level of profit; 2) the company is going to launch a new product on the market; 3) the company is expanding production, which will pay off only with a significant increase in sales; 4) competing firms lose their positions and a real opportunity is created to expand the market share at relatively low cost.

Practice shows that it is extremely difficult to carry out an offensive strategy in markets with a high degree of monopolization and in those commodity markets whose products are difficult to differentiate. Varieties of the offensive strategy can be the following strategies:

The strategy of "accumulation of combat equipment"

The company is preparing an attack on foreign markets, takes a wait-and-see attitude and works out "military technology" in the developed domestic market. She conducts a thorough study business environment foreign market, its conjuncture, the specifics of consumer requests, prepares appropriate personnel, etc.

The strategy of "gaining a foothold"

The firm begins preparatory penetration into the market of the country of interest to it. Acquires distribution networks, warehouses, collects primary information, creates joint ventures, etc. In some cases, the firm approaches the market of interest by penetrating the markets of neighboring countries or practicing penetration techniques in markets with similar operating conditions, but with less competition.

The strategy of "frontal assault", or attack

It is supposed to break the boundaries of hard-to-reach markets with active competition and use tough methods of market struggle. To implement this strategy, significant funds are required and the conditions for the penetration market to be observed so that it does not adhere to a rigid defensive strategy on the part of the competitor firm.

Strategy "vice", or environment

The firm undertakes attacking actions simultaneously in a large number of markets on the outskirts of the markets of its main competitors. This strategy provides for a high level of internationalization of the company's activities.

Strategy "rake"

The firm undertakes active offensive and aggressive market actions in the markets of the main competitors, taking away from them practically all the main segments. This strategy can be called the strategy of world leadership, it is common for leading international companies peace.

Defense strategies

The point of this strategy is to make it as difficult as possible for new competitors to enter and to prevent rivals from trying to take part of the market. The purpose of hard defense is to maintain market share, strengthen the current market position and protect the competitive advantage that the company has. Specific defensive actions include:

Attempts to raise the competitive stakes for rivals and potential competitors by increasing advertising spend, improving customer service, or spending on Scientific research and development.

The release of additional types of products with characteristics that competitors' products have or may have.

Increasing the degree of individualization of customer service and the introduction of other "excesses" that increase customer loyalty and make it difficult or more expensive for the consumer to switch to competitors' products.

Expansion of the product range, covering possible free niches for the penetration of competitors.

Keeping reasonable prices and maintaining attractive quality.

Creation of new production capacities ahead of market needs to block the potential expansion into the market of smaller competitors.

Sufficient investment to maintain cost competitiveness and technology leadership.

* Patenting of promising alternative technologies.
* Conclusion of exclusive agreements with the best suppliers and distributors.

A fortify and defend strategy is best suited to companies that have already achieved dominance and are unwilling to risk antitrust sanctions. It also lends itself well to situations where a company wants to make the most of its current position, in terms of earnings and cash flows, because the growth prospects for the industry are low, or because further gains in market share will not deliver the returns it would be worth. fight. However, such a strategy always assumes growth to keep pace with that of the industry as a whole (to prevent a loss of market share) and requires sufficient capital reinvestment in the business to protect the leader's ability to compete.

Focus strategy (concentration)

The third basic strategy is focusing on a particular customer group, product line, or geographic market segment. Like differentiation, focusing can take many forms. However, if the goals of a low cost or differentiation strategy apply to the industry as a whole, then a focus strategy means focusing on a narrower goal, which affects the activities of all functional areas of the business. The basis of this strategy is the assumption that the company with its help is able to pursue a narrow strategic goal with greater efficiency or productivity than competitors operating in a wider area. As a result of its implementation, the company achieves either differentiation due to better satisfaction of the needs of the target market, or lower costs in servicing this market, or both. Even if the focus strategy does not lead to low costs or differentiation in terms of the market as a whole, it allows one of two or both of these positions in the space of a narrower target market. The firm implementing the focus strategy also has the potential to earn more high profit than the industry average. Its focus implies either a low-cost position within strategic goal, or a high degree differentiation, or both. As shown above in the discussion of cost leadership and differentiation strategies, these positions offer protection against all competitive forces. In addition, focusing can serve as a means of selecting targets least threatened by substitutes, or those areas in which competitors are weakest.

A liquidation strategy, in other words, bankruptcy, is the last and last resort. If the management of the enterprise sees that expenses significantly exceed income, debts are growing, and no measures taken have any effect on the result at all or have very little effect, then it is more rational to make a decision to close the enterprise on its own and wait for the official declaration of bankruptcy.

In this case, you can make an attempt to sell the company at residual value in order to minimize your losses.

The shareholders of an enterprise usually try to avoid complete liquidation by changing the management team, changing direction of activities, restructuring, increasing sales, or even increased advertising. If all else fails, liquidation remains.

Examples of reduction strategies in Everyday life there are a great many: this is the abolition of the release of familiar goods and products, bankruptcy various enterprises, the closure of a store that is close to the house, etc.

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