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Business Strategy in a Commoditized Industry

May 24, 2012

Within industries exist enterprises executing different generic business strategies aimed at capturing profits within that industry. The generic business strategies are based on two approaches, one is the scope of customers served and the other is based on being a cost leader or a value player.

Within the cost leadership broad scope strategy are many competitors within the PC manufacturing business. The chart above illustrates the recent results for those enterprises seeking a cost leadership strategy.  Yet within any industry, there is room for only one winner in that strategy.

Many SME’s (small and medium sized enterprises) believe they are in an industry and can only compete on price. It is here I like to remind them of the cost difference between Apple’s products and those of the manufacturers in the chart at the beginning of this post. Many SME’s explain their value differentiation strategy is based on service and the fact their customers like them.

Of course I reply, but what do your non-customers think of you? Why are they not doing business with you? Are your competitors just not offering service to the industry within which you compete?

The Five Competitive Forces are hovering like the Dementors. They close in on those enterprises with no or poorly executed strategies. What business strategy are you following? Does everyone within your enterprise understand the strategy? How will you know when you are succeeding at your strategy?


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