6.1 Situational Analysis: SWOT Analysis
It can be said that the essence of strategy is opportunity divided by capacity. An opportunity
by itself has no real value unless a company has the capacity (i.e., resources) to take
advantage of that opportunity. On the other hand, Weaknesses can prevent a strategy from
being successful.
FINDING A PROPITIOUS NICHE
The goal is to find a propitious niche—an extremely favorable
niche—that is so well suited to the firm’s internal and external
environment that other corporations are not likely to challenge it
or copy it.
After a firm has found and filled that niche, it is not worth a
potential competitor’s time or money to also go after the same
niche. Such a niche may also be called a strategic sweet spot.
Finding such a niche or sweet spot is not always easy. A firm’s
management must be always looking for a strategic window—
that is, a unique market opportunity that is available only for a
particular time.
6.3 Generating Alternative Strategies by Using a TOWS
Matrix
A TOWS analysis involves the same basic process of listing strengths, weaknesses,
opportunities and threats as a SWOT analysis, but with a TOWS analysis, threats and
opportunities are examined first and weaknesses and strengths are examined last.
6.4 Business Strategies
Business strategy focuses on improving the competitive position of a company’s products
or services within the specific industry.
PORTER’S COMPETITIVE STRATEGIES
Michael Porter proposes two “generic” competitive strategies for outperforming other
corporations : lower cost and differentiation. These strategies are called generic because they
can be pursued by any type or size of business firm, even by not-for-profit organizations:

Lower cost strategy is the ability of a company or a business unit to design,
produce, and market a comparable product more efficiently than its competitors.

Differentiation strategy is the ability of a company to provide unique and
superior value to the buyer in terms of product quality, special features, or aftersale service.
Cost leadership is aimed at broad mass
markets, requiring cost reductions & cost
minimization in areas like R&D, service and
advertising.
Differentiation is aimed at the broad mass
market and involves the creation of a product
or service that is perceived throughout its
industry as unique. For example: BMW,
Nike, Disney
Cost focus is a low-cost strategy that focuses
on a particular buyer group or geographic
market and attempts to serve only this niche.
Differentiation focus, like cost focus,
concentrates on a particular buyer group,
product line segment, or geographic market.
For example : nickelodean.
ოპტიმალური დანახარჯების სტრატეგია - შუაში
TC= Q*VC + FC
Issues in Competitive Strategies
Timing Tactics: When to Compete
A tactic is a specific operating plan that details how a strategy is to be implemented in terms
of when and where it is to be put into action.
A timing tactic deals with when a company implements a strategy. The first company to
manufacture and sell a new product or service is called the first mover (or pioneer). Some of
the advantages of being a first mover are that the company is able to establish a reputation as
an industry leader.
Being a first mover does, however, have its disadvantages. These disadvantages can be
advantages enjoyed by late-mover firms. Late movers may be able to imitate the
technological advances of others, keep risks down by waiting until a new technological
standard or market is established.
Market Location Tactics: Where to Compete
A market location tactic deals with where a company implements a strategy. It can be
offensive or defensive. An offensive tactic usually takes place in an established competitor’s
market location. A defensive tactic usually takes place in the firm’s own current market
position as a defense against possible attack by a rival.
COOPERATIVE STRATEGIES
A company can also use cooperative strategies to gain competitive advantage within an
industry by working with other firms. The two general types are :

Collusion is the active cooperation of firms within an industry to reduce output and
raise prices.

Strategic alliance arrangement between two or more independent firms that engage
in business activities for mutual economic gain.
Joint Venture
A joint venture is formed by two or more separate organizations that creates an independent
business entity and allocates ownership, operational responsibilities, and financial risks and
rewards to each member, while preserving their separate identity/autonomy.