Information Technology Reference
In-Depth Information
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Differentiation.
Deliver different products and services. This strategy can involve
producing a variety of products, giving customers more choices, or delivering higher-
quality products and services. Many car companies make different models that use the
same basic parts and components, giving customers more options. Other car companies
attempt to increase perceived quality and safety to differentiate their products and appeal
to consumers who are willing to pay higher prices for these features. Companies that try
to differentiate their products often strive to uncover and eliminate counterfeit products
about $600 billion annually. To distinguish their products from fakes, microscopic
particles or other markers are inserted to allow companies, government regulators, and
law enforcement agencies to distinguish genuine products from bogus ones.
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Niche strategy.
Deliver to only a small, niche market. Porsche, for example, doesn't
produce inexpensive station wagons or large sedans. It makes high-performance sports
cars and SUVs. Rolex only makes high-quality, expensive watches. It doesn't make
inexpensive, plastic watches that can be purchased for $20 or less.
Porsche is an example of a company
with a niche strategy, producing only
high-performance SUVs and sports
cars, such as the Carrera.
(Source: © Sajjad Hussain/AFP/
Getty Images.)
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Altering the industry structure.
Change the industry to become more favorable to the
company or organization. The introduction of low-fare airline carriers, such as Southwest
Airlines, has forever changed the airline industry, making it difficult for traditional airlines
to make high profit margins. To fight back, airlines such as United launched their own
low-fare flights. Creating strategic alliances can also alter the industry structure. A
strategic alliance
, also called a
strategic partnership
, is an agreement between two or
more companies that involves the joint production and distribution of goods and services.
strategic alliance (strategic
partnership)
An agreement between two or more
companies that involves the joint
production and distribution of
goods and services.
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Creating new products and services.
Introduce new products and services periodically
or frequently. This strategy always helps a firm gain a competitive advantage, especially
for the computer industry and other high-tech businesses. If an organization does not
introduce new products and services every few months, the company can quickly stagnate,
lose market share, and decline. Companies that stay on top are constantly developing
new products and services. A large U.S. credit-reporting agency, for example, can use its
information system to help it explore new products and services in different markets.
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Improving existing product lines and services.
Make real or perceived improvements to
existing product lines and services. Manufacturers of household products are always
advertising new and improved products. In some cases, the improvements are more
perceived than actual refinements; usually, only minor changes are made to the existing
product, such as to reduce the amount of sugar in breakfast cereal. Some direct-order
companies are improving their service by using Radio Frequency Identification (RFID)
tags to identify and track the location of their products as they are shipped from one
location to another. Customers and managers can instantly locate products as they are
shipped from suppliers to the company, to warehouses, and finally to customers.
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Other strategies.
Some companies seek strong g
rowth
in sales, hoping that it can increase
profits in the long run due to increased sales. Being the
first to market
is another
competitive strategy. Apple Computer was one of the first companies to offer complete
