What is 5 Generic Competitive Strategies?

Assalamu’laikum w.b.t.

In The Name of ALLAH, The Most Beneficent and Merciful

Peace and Blessings be Upon Prophet Muhammad s.a.w., His family and Friends

Welcome a new week for us, Alhamdulillah :D

For this week, we have learned about which one to employ for The Five Generic Competitive Strategies. The topic for this week is focused on Five Generic Competitive Strategies and their functions. What they are? Let’s me explain one by one.

THE FIVE GENERIC COMPETITIVE STRATEGIES

   First of all,  in employing a low-cost provider strategy, a company much does a better job than rivals of cost-effectively managing value chain activities and/or it must find innovative ways to eliminate or by-pass cost-producing activities. In other words, it’s striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers.

  Secondly, broad differentiation strategies seek to produce a competitive edge by incorporating attributes and features that set a company’s product/service offering apart from rivals in ways that buyers consider valuable and worth paying for.

  

 Focused Low-cost defined that concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members.

 Second last of 5 generic is focused differentiation. This is concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members.

    Last but not least is Best-Cost Provider. Best-cost provider strategies combine a strategic emphasis on low cost with a strategic emphasis on more that minimal quality, service, features, or performance. The aim is to create competitive advantage by giving buyers more value for the money. It’s include Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals.

“Competitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value.”

-Michael E. Porter

Evaluating A Company's Resources, Capabilities, And Competitiveness

Assalamu’alaikum w.b.t.

In The Name of ALLAH, The Most Beneficent and Merciful

Peace and Blessings be Upon to Muhammad SAW, his family and friends.

EVALUATING A FIRM’S INTERNAL SITUATION

1.     How well is the firm’s present strategy working?

2.     What are the firm’s competitively important resources and capabilities?

3.     Is the firm able to take advantage of market opportunities and overcome external threats to its external well-being?

4.     Are the firm’s prices and costs competitive with those of key rivals, and does it have an appealing customer value proposition?

5.     Is the firm competitively stronger or weaker than key rivals?

6.     What strategic issues and problems merit front-burner managerial attention?

Picture 1

Do you know about SWOT analysis? It is a powerful tool for sizing up a firm's, which is:

v  Internal strengths (the basis for strategy)

v  Internal weaknesses (deficient capabilities)

v  Market opportunities (strategic objectives)

v  External threats (strategic defenses)

 SWOT analysis is a simple but powerful tool for sizing up a company’s strengths and weaknesses, its market opportunities, and the external threats to its future well-being.It's also basing a company's strategy on its most competitively valuable strengths gives the company its best chance for market success.

For illustration, figure 1 below is the example of SWOT Analysis of one business company:

Figure 1

Picture 2

THE CONCEPT OF A COMPANY VALUE CHAIN

#  A company’s value chain identifies the primary activities and related support activities that create customer value. In other words, value chain is an analysis which looks at every step a business goes through from raw materials to the eventual end-user. The objective is to deliver maximum value for the least possible total coast.

                Do you know what is benchmarking? Benchmarking can be simply defined as a continuous process to find and perform best practices that will lead to superior performance. In other words, this is the process of comparing one's business processes to industry bests from other industries. As the definition envision, benchmarking is a process that will make the company's operations lean, and improving quality and productivity. There are many resources of benchmarking information, it is include reports, trade groups, analysis and customers. Besides that, we can also visit to benchmark companies and the data from consulting firms.

   

That's all for this week, thank you :)

Evaluating a Company's External Environment

In The Name of ALLAH, the Most Beneficent and Merciful

Assalamu’alaikum W.B.T

Peace and Blessings be upon The Prophet Muhammad SAW, His family and friends.

The core concept for this topic is about macro-environment which covers a board environmental context in which the industry is a strategic component related covers where the firm industry is situated and has no direct control. It is includes general economic conditions and immediate industry and competitive environment.

All companies operating in the macro environment formed by influences stemming from general economic conditions; demographic population, community values ​​and lifestyle; laws and regulations, technology, and, closer to home, industry and competitive environment in which the company operates.

PESTEL analysis focuses on the six principal components of strategic significance in the macro-environment:

●     Political

●     Economic,

●     Social

●     Technological,

●     Environmental

●     Legal

Figure 1 The Five-Forces Model of Competition: A Key Analytical Tool

The Six Components of the Macro-Environment

COMPONENT	DESCRIPTION
Political factors	These factors include political policies and processes, including the extent to which a government intervenes in the economy. They include such matters as tax policy, fiscal policy, tariffs, the political climate, and the strength of institutions such as the federal banking system. Some political factors, such as bailouts, are industry-specific. Others, such as energy policy, affect certain types of industries (energy producers and heavy users of energy) more than others.
Economic conditions	Economic conditions include the general economic climate and specific factors such as interest rates, exchange rates, the inflation rate, and the unemployment rate, the rate of economic growth, trade deficits or surpluses, savings rates, and per capita domestic product. Economic factors also include conditions in the markets for stocks and bonds, which can affect consumer confidence and discretionary income. Some industries, such as construction, are particularly vulnerable to economic downturns but are positively affected by factors such as low interest rates. Others, such as discount retailing, may benefit when general economic conditions weaken, as consumers become more price-conscious.
Sociocultural forces	Sociocultural forces include the societal values, attitudes, cultural factors, and lifestyles that impact businesses, as well as demographic factors such as the population size, growth rate and age distribution. Sociocultural forces vary by locale and change over time. An example is the trend toward healthier lifestyles, which can shift spending toward exercise equipment and health clubs and away from alcohol and snack foods. Population demographics can have large implications for industries such as health care, where costs and service needs vary with demographic factors such as age and income distribution.
Technological factors	Technological factors include the pace of technological change and technical developments that have the potential for wide-ranging effects on society, such as genetic engineering and nanotechnology. They include institutions involved in creating new knowledge and controlling the use of technology, such as R&D consortia, university-sponsored technology incubators, patent and copyright laws, and government control over the Internet. Technological change can encourage the birth of new industries, such as those based on nanotechnology, and disrupt others, such as the recording industry.
Environmental factors	This includes ecological and environmental forces such as weather, climate, climate change, and associated factors like water shortages. These factors can directly impact industries such as insurance, farming, energy production, and tourism. They may have an indirect but substantial effect on other industries such as transportation and utilities.
Legal and regulatory factors	These factors include the regulations and laws with which companies must comply such as consumer laws, labor laws, antitrust laws, and occupational health and safety regulation. Some factors, such as banking deregulation, are industry-specific. Others, such as minimum wage legislation, affect certain types of industries (low-wage, labor-intensive industries) more than others.

HOW STRONG ARE THE INDUSTRY’S COMPETITIVE FORCES?

There are five competitive forces, which are competition from rival sellers,  competition from potential new entrants,  competition from producers of substitute products, supplier bargaining power and last is customer bargaining power. Figure 2 below shows the further explanation :)

Figure 2

Last but not least, I want to show one example for five force of Nike, which is as figure 3 below:

Figure 3

Enough for this week, thanks for your good reading :)

Topic for next week- EVALUATING A COMPANY'S RESOURCES, CAPABILITIES, AND COMPETITIVENESS. Wait for me, yeah ;)


Assalamu'alaikum :D

What is Vision and Mission ?

Bismillahirrahmanirrahim

Assalamu’alaikum w.b.t.

Peace and blessings be upon The Prophet Muhammad SAW, His family and friends.

Alhamdulillah,

In this week 2,

We have learned about the business vision and mission.

Not only the business. Every person has their vision and mission, right?

Okay, let’s I tell about what is vision and mission.

Vision statement should answer the basic question, “What do we want to become?” Basically, vision is short, and preferably one sentence. Such as,

“I want to be a businesswoman in the future”

Or perhaps, “I want to become a successful entrepreneurship one day”

 This vision must be achieved neither in short-term, below 1 year, mid-term, 1-3 years or long-term, 3-5 years. 

Whereas, mission statement is a declaration of an organization’s “reason for being”. In other that, mission is what an organizational is and why it exists. And the answers the pivotal question “What is our business? The nature of business it is in, and who are our customers it looks to satisfy”.

It is also called a creed statement, a statement of purpose, a statement of philosophy, a statement of beliefs, and a statement of business principles.

For example, we want to build company which produce product likes hijab for female and other clothes for male. For this product, we will produce quality clothing standard and comfortable to the user. Focus on how to dress according to the Islamic Syariah. And everything we do, we strive to act honestly, trustworthy, and easy to talk. No fraud and interest.

The Important of Vision and Mission Statements

Why need for vision and mission?

1.       To ensure unanimity of purpose within the organization.

2.       To provide a basis, or standard, for allocating organizational resources.

3.       To establish a general tone or organizational climate.

4.       To specify organizational purposes.

5.       5. To facilitate the translation of objectives into a work structure.

There are many benefits having a clear vision and mission, which is:

1.       Achieve clarify of purpose among all managers and employee.

2.       Provide direction.

3.       Achieve higher organizational performance.

4.       Achieve synergy among all managers and employees.

5.       Motivated organization worthy of support.

Once we put our mission, we also should know about mission statement components which important to achieve the goals.

1.       Customers-Who are the firm’s customers?

2.       Products or services-What are the firm’s major products or services?

3.       Markets-Geographically, where does the firm compete?

4.       Technology-Is the firm technologically current?

5.       Concern for survival, growth, and profitability-Is the firm committed to growth and financial soundness?

6.       Philosophy-What are the basis beliefs, values, aspirations, and ethical priorities of the firm?

7.       Self-concept-What is the firm’s distinctive competence or major competitive advantage?

8.       Concern for public image-Is the firm responsive to social, community, and environmental concerns?

9.       Concern for employees-Are employees a valuable asset of the firm?

Here, I want to give an example of mission statement of "Lembaga Tabung Haji (LTH)", Malaysia which is familiar with the organization produce a service to help the Muslim community in the country to fulfill the Fifth pillars of Islam, perform Hajj at Makkah and Madinah.

Vision

Pillar of Ummah’s economic success; excellence Hajj management

Mission

In achieving TH’s vision, they pledge:

1.       To strengthen the ummah’s economy.

2.       To remain active in seeking strategic investments locally and globally to ensure sustainable and continuous growth.

3.       To manage and enrich depositor’s funds.

4.       To continuously give excellent services.

5.       To facilitate and assist pilgrims in achieving mabrur hajj.

6.       To provide competitive, halal and toyyiban returns.

For the conclusion, vision and mission are important to create the framework and give inspiration our organization and its employees need to successful.  An old Japanese proverb eloquently states the important symbiotic relationship between vision and action. 

“Vision without action is a daydream. Action without vision is a nightmare”

Enough for this week. See you again.

Assalamu'alaikum :)