Corporate Learnings

Business Strategies
Business Strategy focus on improving the competitive position of the company or business unit’s products/ services within the specific industry or market segment that the company/ SBU serves.
Business strategy can be:
Ø Competitive
Ø Cooperative

Porter’s Competitive Strategies: Competitive strategies raise following questions:
Ø Competitive Advantage (Generic strategies): Should we compete on basis of low cost or differentiation (quality/ services).
Ø Competitive scope: Should we compete on most sought after share of market (entire) or niche.

A tactic is a specific operating plan detailing how a strategy is to be implemented in terms of :

Ø Timing tactics- When to compete
v First Movers (Pioneer)
v Late Movers (Laggards)

Ø Market location tactics- Where to compete
v Offensive Tactics: Takes place in established competitors market location. It can take place in following forms:
• Frontal assault: e.g. Nirma Vs HUL
• Flanking maneuver: e.g. Cyrix (math’s coprocessor) Vs Intel
• Bypass attack: e.g. Fruit drinks Vs Soft drinks
• Encirclement: e.g. Microsoft Vs Netscape
• Guerrilla Warfare: e.g. Ganga Vs Bisleri
v Defensive Tactics: Takes place in firm’s own market current market location as a defense against possible attack of a rival. According to Porter, defensive tactics deliberately reduce short term profitability to ensure long term profitability.

• Raise structural barriers: offer full line; enter agreement with suppliers; encourage government to raise barriers

• Increase expected retaliation: Defend territory by drastic cut in prices, sales discount, coupons; new versions

• Lower inducement for attack: Reduce challenger’s expectation of future sales/ profits.


Cooperative strategies are applied to gain competitive advantage within an industry by working with other firms. The two general types of cooperative strategies are :
Ø Collusion: It is an active cooperation of firms within an industry to reduce output and raise prices in order to get around the normal economic law of supply and demand. Collusion can be:
• Explicit: Archer Daniels Midland (lysine)-US, Japan, S. Korea
• Tacit:

Ø Strategic Alliances: It is a partnership of two or more corporation/ SBUs to achieve strategically significant objectives that are mutually beneficial. Corporations form alliances for :
ü Obtaining technology/ manufacturing capabilities: Intel-HP-Pentium micro processor
ü Obtaining access to specific markets:P&G
ü Reducing financial/ political risks: IOC-Ceylon Petroleum Corporation
ü Achieve/ insure competitive advantage: GM-Toyota

Strategic alliances can range from:
• Mutual service consortia (weak & distant): IBM- Toshiba- Siemen-Computer chips
• JV/ Licensing arrangement:
• Value Chain partnership (strong & close)