Industrialised, Integrated, Intelligent sustainable Construction - I3con
Industrialised, Integrated, Intelligent sustainable Construction - I3con
Industrialised, Integrated, Intelligent sustainable Construction - I3con
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SUSTAINABLE CONSTRUCTION HANDBOOK 2<br />
26<br />
• What resources and strengths do they have?<br />
• What is their record of performance?<br />
• What is the current strategy of competitors?<br />
• What are the assumptions underlying competitors’ approach to their strategy<br />
development?<br />
� Strategic group analysis<br />
This analysis can build an understanding of the position of an organisation in relation to<br />
the strategies of other organisations. The aim is to define clearly the groups of<br />
organisations which follow similar strategic characteristics, similar strategies or<br />
competing on a similar basis.<br />
� Market segment<br />
Because of the different buyers power and interests, it is very important that every<br />
organisation breaks the market into segments and know precisely which segment it<br />
operates in.<br />
(5) Identify the key opportunities and threat<br />
- What are the key forces at work in the industry?<br />
- Are there underlying forces?<br />
- Is it likely that the key forces will change and if so what?<br />
- How do particular competitors stand in relation to these competitive forces?<br />
- What can be done to manage the competitive forces affecting the organisation?<br />
- Are some market segments of the industry, or even other industry, more attractive?<br />
Business Competitive Strategies<br />
Michael Porter suggested four "generic" business strategies that could be adopted in order to gain<br />
competitive advantage. These strategies are: Differentiation, Cost Leadership, Differentiation Focus<br />
and Cost Focus. These strategies relate to the extent to which the scope of businesses' activities are<br />
narrow versus broad and the extent to which a business seeks to differentiate its products. The<br />
differentiation and cost leadership strategies seek competitive advantage in a broad range of market or<br />
industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a<br />
narrow market or industry.<br />
(1) Differentiation<br />
This strategy involves selecting one or more criteria used by buyers in a market - and then<br />
positioning the business uniquely to meet those criteria. This strategy is usually associated with<br />
charging a premium price for the product - often to reflect the higher production costs and extra<br />
value-added features provided for the consumer. Differentiation is about charging a premium price<br />
that more than covers the additional production costs, and about giving customers clear reasons to<br />
prefer the product over other, less differentiated products.<br />
(2) Cost Leadership<br />
With this strategy, the objective is to become the lowest-cost producer (with acceptable quality) in<br />
the industry. If the achieved selling price can at least equal (or near) the average for the market, then<br />
the lowest-cost producer will enjoy the best profits. This strategy is usually associated with largescale<br />
businesses offering "standard" products with relatively little differentiation that are perfectly<br />
acceptable to the majority of customers. A low-cost leader will also discount its product to maximise<br />
sales, particularly if it has a significant cost advantage over the competition which can further<br />
increase its market share.<br />
(3) Differentiation Focus<br />
In this strategy, a business aims to differentiate within just one or a small number of target market<br />
segments. The special customer needs of the segment mean that there are opportunities to provide
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