Six Basic Strategies

Select what you think is the best strategy for the company and explain why in a short one-page paper.

These six basic strategies can be the starting point for your own custom strategy.
12.1 Broad Cost Leader

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A Broad Cost Leader strategy maintains a presence in both segments. The company will gain a competitive advantage by keeping R&D, production and material costs to a minimum, enabling the company to compete on the basis of price, which will be below average. Automation levels will be increased to improve margins and to offset second shift/overtime costs.

Mission Statement

Low-priced products for the industry: Our brands offer solid value. Our stakeholders are bondholders, customers, stockholders and management.

Tactics

Research & Development: We will keep our existing product line and introduce at least one new line, maintaining a presence in both segments. We’ll work to keep our products up to date in each segment despite high automation levels, without sacrificing our cost/price advantage.

Marketing: Our Company will spend modestly on promoting and selling products in our industry. Our prices will be lower than average. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility.

Production: We will significantly increase automation levels on all products. However, because automation sets limits upon our ability to reposition products with R&D, we automate more in the slower moving Low End segments than in the fast moving High End. We will prefer second shift/overtime to capacity expansions.

Finance: We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep assets/equity between 2.0 and 3.0.

12.2 Broad Differentiator

A Broad Differentiator strategy maintains a presence in both segments. The company will gain a competitive advantage by distinguishing products with an excellent design, high awareness and easy accessibility. The company will develop an R&D competency that keeps designs fresh and exciting. Products keep pace with the market, offering improved size and performance. Prices will be above average. Capacity will be expanded as higher demand is generated.

Mission Statement

Premium products for the industry: Our brands withstand the test of time. Our stakeholders are customers, stockholders, management and employees.

Tactics

Research & Development: We will keep our existing product line, and introduce at least one more line, maintaining a presence in both segments. Our goal is to offer customers products that match their ideal criteria for positioning, age, and reliability.

Marketing: Our company will spend aggressively in promotion and sales in both segments. We want every customer to know about our superb designs, and we want to make our products easy for customers to find. We will price at a premium.

Production: We will grow capacity to meet the demand that we generate. After our products are well positioned, we will investigate modest increases in automation levels to improve margins, but never at the expense of our ability to reposition products and keep up with segments as they move across the perceptual map.

Finance: We will finance our investments primarily through stock issues and cash from operations, supplementing with bond offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0.

12.3 Niche Cost Leader (Low Technology)

A Niche Cost Leader Strategy concentrates on the Low Tech segment. The company will gain a competitive advantage by keeping R&D, production and material costs to a minimum, enabling the company to compete on the basis of price, which will be below average. Automation levels will be increased to improve margins and to offset second shift/overtime costs.

Mission Statement

Reliable products for low technology customers: Our brands offer value. Our stakeholders are bondholders, stockholders, customers and management.

Tactics

Research & Development: We will concentrate our existing product line in the Low Tech segment, initiating projects as necessary to prevent total obsolescence. We will also introduce at least one new product to our Low Tech customers.

Marketing: Initially we will attempt to keep pace with the awareness and accessibility of our competitors’ products. After we establish our cost leadership position we will revisit our situation to decide whether sales and promotion budgets should be reduced or if we should continue to match our competitors. Our prices will be lower than average.

Production: We will significantly increase automation levels on our products. We will prefer second shift/overtime to capacity expansions.

Finance: We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep assets/equity between 2.0 and 3.0.

12.4 Niche Differentiator (High Technology)

A Niche Differentiator strategy focuses on High Tech. The company will gain a competitive advantage by distinguishing its products with an excellent design, high awareness, easy accessibility and new products. The company will develop an R&D competency that keeps designs fresh and exciting. Products will keep pace with the market, offering improved size and performance. The company will price above average and will expand capacity as it generates higher demand.

Mission Statement

Premium products for technology oriented customers: Our brands define the cutting edge. Our stakeholders are customers, stockholders, management and employees.

Tactics

Research & Development: We will have multiple product lines in the High Tech Segment. Our goal is to offer technology oriented customers products that match their ideal criteria for positioning, age, and reliability.

Marketing: Our Company will spend aggressively in promotion and sales in the High Tech segment. We want every customer to know about our superb designs, and we want to make our products easy for customers to find. We will price at a premium.

Production: We will grow capacity to meet the demand that we generate. After our products are well positioned, we will investigate modest increases in automation levels to improve margins, but never at the expense of our ability to reposition products and keep up with the High Tech segment as it moves across the perceptual map.

Finance: We will finance our investments primarily through stock issues and cash from operations, supplementing with bond offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0.

12.5 Cost Leader with Product Lifecycle Focus

A Cost Leader with a Product Lifecycle Focus gains a competitive advantage by keeping R&D, production and material costs to a minimum, enabling it to compete on the basis of price. The Product Lifecycle Focus will allow the company to reap sales for many years for each new product introduced into the High Tech segment. Products will then mature into Low Tech products.

Mission Statement

Reliable products for mainstream customers: Our brands offer value. Our stakeholders are bondholders, stockholders, customers and management.

Tactics

Research & Development: We will have low R&D spending with very little repositioning on existing products. We will introduce a new product to the High Tech segment every 2-3 years.

Marketing: Initially we will attempt to keep pace with the awareness and accessibility of our competitors’ products. After we establish our cost leadership position we will revisit our situation to decide whether sales and promotion budgets should be reduced or if we should continue to match our competitors. Our prices will be lower than average.

Production: We will significantly increase automation levels early in the product’s life-cycle.

Finance: We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep assets/equity between 2.0 and 3.0.

12.6 Differentiator with Product Lifecycle Focus

A Differentiator with a Product Lifecycle Focus strategy distinguishes its products with excellent design, high awareness and easy accessibility. The company will develop an R&D competency that keeps designs fresh and exciting as they change in appeal from High Tech to Low Tech. Products will keep pace with the market, offering improved size and performance. The company will price above average and will expand capacity as it generates higher demand.

Mission Statement

Premium products for mainstream customers: Our brands withstand the test of time. Our stakeholders are customers, stockholders, management and employees.

Tactics

Research & Development: We will have multiple product lines in both segments. Our goal is to offer customers products that match their ideal criteria for positioning, age, and reliability.

Marketing: We will spend aggressively in promotion and sales. We want every customer to know about us, and we want to make our products easy for customers to find. We will price at a premium.

Production: We will grow capacity to meet the demand that we generate. After our products are well positioned, we will investigate modest increases in automation levels to improve margins.

Finance: We will finance our investments primarily through stock issues and cash from operations, supplementing with bond offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are somewhat adverse to debt, and prefer to avoid interest payments. We expect to keep assets/equity (leverage) between 1.5 and 2.0.

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