Competitive Strategies 101
This strategy focuses on being the lowest-cost provider in an industry.
What is a Low-Cost Provider Strategy?
This fast-food giant offers a dollar menu, standardized products, and streamlined operations to keep costs low while appealing to the mass market.
What is the Low-Cost Provider Strategy? (McDonald's,Burger King, Wendy’s)
Unlike most airlines, Southwest doesn’t charge extra for these, making budget-conscious travelers happy.
What are Checked Bags?
A company that lowers prices too much without cutting costs efficiently may suffer from this major profitability issue.
What is the Price War Trap?
When a company differentiates its product from competitors but sells to a broad market, it is following this strategy.
What is a Broad Differentiation Strategy?
This tech company charges premium prices for its sleek, high-quality products and has a strong brand reputation for innovation and design
What is the Broad Differentiation Strategy? (Apple, Tesla)
Southwest keeps its planes in the air longer than competitors by minimizing time spent at gates, a key element of its low-cost strategy.
What is Quick Turnaround Time?
When a company tries to pursue both low cost and differentiation but fails to do either effectively, it falls into this strategic pitfall.
What is Being Stuck in the Middle?
This strategy involves focusing on a narrow customer segment and offering a low-cost product.
What is a Focused Low-Cost Strategy?
This organic grocery store chain competes by selling only premium natural and organic products, catering to a health-conscious niche market.
What is the Focused Differentiation Strategy? (Whole Foods, Erewhon Market)
Before Southwest became a dominant airline, this European carrier copied its low-cost model and took over Europe’s budget airline industry.
What is Ryanair?
This occurs when a company’s differentiation efforts fail to provide real value to customers, making the strategy ineffective.
What is Over-Differentiation?
Michael Porter argued that a company must choose one of the five strategies to succeed. A company that tries to pursue multiple strategies at once may suffer from this issue.
What is Strategic Blurring or Stuck-in-the-Middle?
This boutique skincare brand sells only through exclusive retailers and focuses on using rare, organic ingredients to appeal to high-end consumers.
What is the Focused Differentiation Strategy? (La Mer, Lush, Kiehl’s)
Southwest doesn’t offer this luxury seating class found on most major airlines.
What is First Class?
A company that does not continuously adapt its strategy to market shifts and industry changes may suffer from this dangerous flaw.
What is Strategic Intertia?
This evaluation method assesses whether a company's strategy aligns with industry conditions, leverages its strengths, secures a lasting market edge, and drives strong business results.
What are the Three Tests of a Winning Strategy? (Fit, Competitive Advantage, Performance)
This discount furniture retailer provides modern designs at affordable prices by keeping production and distribution costs low while offering stylish home solutions.
What is the Best-Cost Provider Strategy? (IKEA)
Southwest does not assign these, making boarding faster and more efficient than traditional airlines
What are Seat Assignments?
Expanding too quickly without the necessary resources or capabilities can lead to this major strategic pitfall, often seen in failing businesses.
What is Overexpansion?