Companies wishing to be leading-edge competitors in the world must be willing to implement some
or all of the following:
Cost Leadership Strategy
Goal: offer products or services at the lowest cost in the industry.
Challenge: earn a profit for the company as quickly as possible rather than operating at a loss
and draining profitability from the involved market players.
Example: Walmart features low prices on key items, of which customers are very price-
conscious, and offers less aggressive discounts on other merchandise.
Goal: provide products that stand out as clearly as possible from competitive offerings.
Challenge: know the market well enough to be able to produce something new and competitive
Example: USA Southwest Airlines promotes no-fee baggage handling as unique from other
Goal: leap over other market players by introducing completely new or notably better products or
Challenge: Technology start-up companies often try to "disrupt" the existing marketplace and/or
make the current market entries obsolete with their own breakthrough product offerings. More
established companies try to pursue this strategy despite their product offering having already
achieved market acceptance.
Example: Apple Inc. with its iPod personal music players and iPad tablet computers.
Operational Effectiveness Strategy
Goal: perform internal business activities better than competitors
Challenge: making the company easier or more pleasurable to do business with compared to
Example: State Farm Insurance promotes their agents as "good neighbors" who actively help
Technology-based Competitive Strategy (Project Socrates)
Goal: do in-depth research to produce key findings that become the basis for understanding the
competitive system and then create the support tools for developing and executing competitive
Challenge: knowing who to target and what to research, accurate interpretation, resources to
carry out the task
Example:USA, during the Reagan Administration, had a team of experts led by Michael Sekora
to 1) determine why US industries were losing their ability to compete in the world marketplace
and 2) develop a solution to restore the US ability to compete.