Assignment Task 1:
Discuss how a firm could use product leadership, operational excellence and customer intimacy as a basis for competitive advantage. Use examples to illustrate.
Treacy and Wiersema (1995) offer their classification of competitive marketing strategies. These strategies are called value disciplines in that they are strategies for delivering superior customer value. The three strategies are:
1. Product leadership:
- the firm provides value by offering a continuous stream of leading-edge products that make their own competing products obsolete
- the firm serves customers who seek state-of-the-art goods or services regardless of the price or convenience.
2. Operational excellence:
- the firm leads the industry by providing superior value through price and convenience
- the firm serves customers who seek good, reliable quality goods and services but who want them cheaply and conveniently.
3. Customer intimacy:
- achieved through precise segmentation of the firm's markets
- involves the development of a detailed sophisticated customer database
- the firm empowers staff to respond quickly to customer needs
- the firm aims to serve customers who seek a premium and are willing to pay for it.
Assignment Task 2:
Select an industry (e.g. airlines, fast food etc) and use Porter's Five Forces model to analyse the industry structure and determine the level of competitive rivalry. Explain how a company wanting to enter the industry could use this information.
Selection of the industry (either broadly e.g. beverage or narrow e.g. cola-flavoured soft drinks) is a key component of the assignment and student answers will vary depending on the specific industry selected. Their answers should identify the following five forces identified in Figure 9.9:
- intensity of rivalry e.g. number of competitors, relative size of each, market growth rate, product differentiation and significance of fixed costs
- threat of new entrants e.g. absolute cost barriers, legal barriers, product differentiation and economies of scale
- threat of substitutes e.g. ease and cost to consumer of switching
- bargaining power of buyers e.g. number and size of firms, degree of customer dependence, product differentiation and ability of customers to integrate vertically
- bargaining power of suppliers e.g. number and size of firms, degree of customer dependence, product differentiation and ability of customers to integrate vertically.
Companies wanting to enter a particular industry can use this analysis to determine how intense competition is in the industry. For example, the company might look to an industry where barriers to entry, threat of substitutes and bargaining power of buyers and suppliers are all low.