Framework: Competitive Positioning (low cost or differentiation)
Core Question: How can I stake out a viable position within an industry?
Key Application Steps:
Divide the firm into various activities (e.g., the value chain).
Examine potential sources for differentiation or cost reduction in these various activities.
Make an overall choice on whether to follow the low cost or differentiated approach.
Decide on the scope of competitive activities (broad versus narrow)
Comparisons with other concepts and frameworks:
Challenge to 5 Forces – It is possible to earn profits in an industry that is structurally unattractive!
Illustrative Decision Contexts:
How to enter a given industry (e.g., low end, mass market, etc.)?
How can I benchmark rivals?
How broad or narrow should be my competitive aspirations?
Should I reposition the firm within an industry?
Real world example/HBR Case:
- Patagonia
