Competitive advantage cost advantage. Cost leadership and ways to achieve it

MARKETING - when the company does not take into account the differences between segments and considers the market as a whole. Such tactics are focused primarily on what is common in the needs of buyers, and not on their differences, i.e. the product of the enterprise should be suitable for the maximum number of consumers, almost all. Competitive advantages come at a cost. Therefore, all actions and decisions of the enterprise are aimed primarily at reducing production, marketing, advertising and service costs.

Businesses provide the basic basis for competitive advantage, either in cost or differentiation.

In contrast to the previous one, the competitor-focused approach focuses on strategies and tactics to counter competitors. Within this approach, two ways to achieve competitive advantages can be used: leadership in terms of costs or the implementation of a set of actions to worsen the quality of the competitive environment.

Expansion of production volumes, which will allow obtaining competitive advantages in terms of internal costs 23 2

Achieving cost advantage. In this case, the company's policy is to achieve competitive advantages through cheaper production and marketing of products .. Mass production allows you to minimize unit costs and set low prices, which ultimately makes it possible to have a higher share of profits compared to competitors rising costs and attracting price-driven consumers. However, such a strategy can be very risky for a company that does not have sufficient financial resources, as it can lead to a temporary decrease in the number of consumers of products and a price war with competitors.

The core, fundamental business strategy is aimed at finding ways to achieve sustainable competitive advantages. The competitive struggle of strategic groups is usually described by the three most common strategies of cost leadership, differentiation, and focusing efforts in certain areas. However, these strategies do not answer the basic question of how to gain an advantage over direct competitors, i.e. within a strategic group.

strategic management - one of the general strategies of the company, aimed at a wide market and produces goods in large quantities, minimizing costs and offering low prices. This strategy relies on performance and is usually associated with the existence of the experience curve effect. It involves careful control of fixed costs, investments in production aimed at realizing the experience curve effect, careful study of new product designs, and reduced marketing and advertising costs. The focus is on low costs compared to competitors. Low cost manufacturing is more than just moving down the experience curve. The manufacturer must seize every opportunity to obtain cost advantages without ignoring the principles of differentiation, since, from the point of view of consumers, its products must be acceptable or comparable with those of competitors.

The biggest strategic mistake, according to M. Porter, is the desire to chase all the rabbits, that is, to use all competitive strategies at the same time. In other words, according to M. Porter, a company that has not made a choice between strategies - to be a leader in the field of costs or to engage in differentiation, risks getting stuck halfway. Such companies are trying to achieve advantages based on both low cost and differentiation, but in fact get nothing. Poor performance results from the fact that the cost leader, differentiator, or strategy focused firm will be in the best market position to compete in any segment. A firm stuck in the middle will make a significant profit only if the industry is extremely favorable, or if all other firms are in a similar position. Rapid growth in the early stages of an industry's life cycle may allow such firms to earn good returns on their investments, but as the industry matures and competition becomes more intense, those firms that have not made their choice between existing alternative strategies are at risk of being displaced.

The firm needs to know its competitors well, since the success of its activities is determined by the creation of higher customer value compared to them. From this point of view, methods for analyzing competitors and ways to create a competitive advantage are considered. The factors that determine the attractiveness of the industry and its long-term profitability, as well as the intensity of rivalry of competitors in the same industry are discussed. It is shown that a necessary condition for the effective functioning of a company in a competitive environment is the use of either a differentiated marketing strategy (offering a product that provides the highest consumer value) or a minimum cost strategy. Potential firms are more highly qualified personnel and better resources used to create new products or enter new markets. The analysis of the "value chain" - the activities associated with the design, manufacture, introduction to the market, distribution and maintenance of the product - allows the company to create and maintain a market leader position at minimal cost.

Along with low prices, another advantage of E N is the possibility of trading around the clock. The emergence of a vast class of individual investors has led to the need to increase the trading session and even move to round-the-clock trading to meet the demand of investors in other time zones. Therefore, the opportunity to trade around the clock is seen as a competitive advantage for E N, able to increase the flow of customers without additional costs. Such an opportunity for a traditional exchange would be fraught with immeasurably large costs associated with maintaining a huge infrastructure. The third factor in the attractiveness of E N is their openness to investors who previously did not have direct access to trading and could not compete with broker-dealers. Today, investors' orders through E N appear on the market and can affect its dynamics. And, finally, EN are characterized by transparency, i.e. all received orders are reflected in the system, and information on them is available to all subscribers. In addition, the best bid enters the market (for a specific trading floor) on behalf of E N, which has the status of a market maker.

Cost Leadership Strategy - A leadership strategy through cost savings. In strategic management, one of the general strategies of a firm to create competitive advantage. Using a cost leadership strategy, the firm focuses on a broad market and produces goods in large quantities, minimizing costs and offering low prices. This strategy relies on performance and is usually associated with the experience curve effect. It involves careful control of fixed costs, investments in production aimed at realizing the experience curve effect, careful study of the design of new products, reduced marketing and

The management of the company must seriously analyze the existing competitive advantages and choose one of two strategies for behavior in the market. Like any economic choice, the need for a clear orientation in one's strategy is associated with limited economic (production) resources. Attempts to combine elements of different strategies lead to a drop in efficiency. However, it does not follow from this that a firm that has made a bet on lower costs should not care about the quality of its goods and services acceptable to consumers. In turn, an enterprise that has chosen a differentiation strategy should not overestimate prices disproportionately compared to competitors.

Thus, when in multiple product markets the likelihood of product differentiation by its properties or quality decreases, and the corporate image or strategy of firms is difficult to change in the short term, logistics becomes an increasingly important competitive factor. Under such conditions, competitive advantage may arise from the firm's ability, through its logistics activities, to achieve differences in market segmentation, changes in the economic environment and market requirements, as well as changes in one's own and others' tactical maneuvers. The policy of firms aimed at obtaining income from logistics activities, as a rule, leads to an increase in profits. Studies by foreign experts show that the contribution of logistics to the profits of companies depends on the level of service. At the same time, it was noticed that when the level of 90% and above is reached, logistics costs begin to outstrip the growth of income from this type of activity. Starting from 95%, the effect becomes negative (Fig. 2.6).

Frontal attack. It is characterized by an attack on the forward positions of the defending side. If the defending firm leads the market, the success of a frontal attack usually depends on four factors. First, the attacker must have a clear and sustainable competitive advantage. If the advantage is based on cost superiority, this will allow you to use the strategy to fight the market leader low prices. A distinct differentiating advantage provides the basis for creating the highest customer value. Resilience is necessary to delay the possibility of a retaliatory strike from the leader.

Relationships often lead to the fact that the additional costs of "fitting" individual activities to each other pay off in the future. For example, more expensive designs and components or more stringent quality control can reduce aftermarket costs. Firms must incur such costs in accordance with their strategy in the name of competitive advantage.

A strategy based on internal competitive advantage is a cost dominance strategy that is based mainly on the organizational and production know-how of the firm.

After the company's management has decided on the marketing channels, it's time to build a distribution system that can effectively deliver goods and services to customers. The management of the company is faced with the need to solve two completely opposite tasks. On the one hand, it is required to minimize the costs of distribution of goods. As a rule, they (costs of transportation, inventory maintenance, warehousing, order processing, etc.) amount to up to 20% of sales in value terms. Since trading profits usually do not exceed 5% of sales value, it is clear that the reduction of distribution costs is one of the main incentives for managers. On the other hand, the distribution of goods is the main one. Companies that can immediately provide a product or service to a customer are able to charge higher prices and attract new customers. The challenge for management is to provide a high level of customer service without excessive distribution costs.

The real work for every business is to compile lists of strengths and weaknesses and assessing the importance of each position depending on the competitive conditions in the industry. The most significant strengths of the enterprise should be the basis of the strategy. On the other hand, a good strategy should be able to minimize the negative impact of the company's weaknesses on its strategic position. Among the strengths, it is customary to single out one main position - what the company does especially well compared to competitors. This may be, for example, the presence of production secrets that ensure low costs, best service, best location, new product introduction system, etc. This strength is considered separately and is called by a special term - exceptional excellence. It is precisely what constitutes the exceptional superiority of the enterprise that should, in practice, become the basis for building a competitive advantage within the framework of the strategy being developed.

Large companies, located on a V-shaped curve, are usually focused on the market as a whole, achieving cost advantages, gaining a significant market share and realizing economies of scale in production. Small competitors make high profits by focusing on selected narrow market segments, developing special approaches to production, marketing, and product distribution. Ridiculously, average competitors at the bottom of the V-curve are unable to gain competitive advantage and very often show low income levels. Trapped in the No Man's Land strategy, they are too large to benefit from local competition, but not large enough to capture economies of scale.

In order to bridge the gap between the predictions of theoretical models and the empirical evidence, we need to modify the assumptions put forward earlier. First, we must consider that not all firms often have access to the same technologies. For some time, DuPont had a cost advantage over its competitors in titanium dioxide production. This was because DuPont held exclusive patent rights to the low cost manufacturing process. Even after these patents expired, DuPont retained its advantage for the most part as it shifted down the learning curve—in other words, the first mover advantage developed into a sustainable competitive advantage.

Not so long ago, innovation was a weapon that the world's leading manufacturers turned to only in cases of particularly tough competition. In terms of strategy, such companies can be called third-generation competitors. At the heart of the competition of the first generation (after the end of World War II) was price rivalry, the achievement of cost advantages. In particular, Japanese companies such as Toyota, asio and Honda,

The choice of market seems to be relatively simple and uncomplicated. And yet one may wonder whether the choice of England should have been guided primarily by factors of similarity in language and culture. Candidate countries can be classified according to several criteria, such as 1) market size, 2) market growth dynamics, 3) costs of doing business, 4)

So, after a cursory examination of Porter's basic competitive strategies, I would like to move on to a study of Cost Competitive Advantage Strategies.

Of the three common strategies cost minimization is the most understandable and obvious, in my opinion. By choosing this strategy, the company sets itself the following goals:

• 1) Growth in sales volume and obtaining excess profits by reducing the share of competitors with a higher price.
• 2) Tightening the entry barrier for potential competitors seeking to enter this business.
• 3) Creation of financial reserves to ensure price stability in the event of an increase in prices for raw materials, materials, components and semi-finished products (price stability).
• 4) The displacement of substitute goods due to the mass character and relative cheapness of manufactured goods with low production costs.
• 5) Creation of the image of a conscientious and reliable partner who cares about the budget of consumers.

Having the advantage of lower costs brings the firm profits above the industry average, even in a highly competitive environment. A low-cost position protects the company from all five competitive forces, because market forces continue to drive down profits until the profits of competitors following the top performer are wiped out, and because less efficient competitors are the first to suffer from competitive pressure. .

Often this strategy is chosen by companies with a wide scope of activity. The sources of benefits can be varied. This may be increased efficiency through economies of scale, special access rights to the source of raw materials, etc. Such industries must constantly look for new sources of cost advantages and extract from them maximum benefit. In some industries, cost advantage is the main basis for competitive advantage: in consumer goods, opportunities to compete on other dimensions are very limited. But even where competition focuses on product differentiation, increased competition tends to make cost-effectiveness a precondition for profitability. The clearest examples of companies and industries that have been transformed by the pursuit of cost efficiency can be found in sectors where regulatory competition has skyrocketed—air travel, telecommunications, banking, and power generation.

In order to achieve my goals, I will consider methods that allow:

• - identify the main sources of cost advantage in the industry;
• - assess the position of the firm in the industry in relation to costs, decomposing the firm into certain types activities;
• - use cost and relative cost analysis as a basis for recommending strategies to improve a firm's ability to compete on cost.

There are five basic competitive strategies:
1. Cost leadership strategy - attracting customers by minimizing production costs. It provides for a reduction in the total cost of producing a product or service, which attracts a large number of buyers. There are 2 ways to achieve cost advantage:
- do a better job than competitors by effectively operating in the internal value chain and managing the factors that determine the level of costs in the value chain.
- improvement of the company's value chain up to the consolidation of operations or the rejection of high-cost activities in the value chain (modernization, reconstruction, simplification of product development, transfer production capacity closer to the consumer, use of less capital-intensive rational technology, finding ways to eliminate the use of expensive materials and components). Example - joint actions of various departments can provide economies of scale, reduce the time to create new technology and/or achieve full capacity utilization; reducing specifications for purchased materials; contributing less distinguishing features regarding the goods of competition.
Conditions for a successful cost leadership strategy:
- price competition among sellers is especially strong;
- the manufactured product has standard characteristics that meet the requirements of consumers.
- most buyers use the product in the same way;
- the cost of buyers to switch from one product to another is quite low;
- there are a large number of buyers who have serious power to reduce the price.
Two ways to generate significant additional profit for the cost leader:
- reduce product prices by reducing costs and attract more buyers,
- without changing the price.
Disadvantages of the strategy:
- the strategy is fraught with a protracted price war,
- cost reduction is not always the exclusive property of the company, and competitors can easily repeat them,
- reducing costs, it is necessary to pay attention to other factors: product improvement.

2. Broad differentiation strategy - attracting customers by maximizing the difference between the company's products and similar products of competitors. It becomes attractive when consumer demands and preferences become diversified and can no longer be satisfied with standard products. In order for a differentiation strategy to be successful, a firm must study the needs and behavior of customers, know what customers prefer, what they think about the value of the product and what they are willing to pay for.
Successful differentiation allows a firm to:
- set an increased price for the product/s;
- increase sales volume (because the bulk of consumers are attracted by the distinctive characteristics of the product);
- win customer loyalty to your brand (some customers become very attached to the additional characteristics of the product). An example is the delivery of spare parts around the world in less than 48 hours, in case of violation of the deadlines, delivery is free of charge by Caterpillar.
A differentiation strategy works best in markets where:
1. There are many ways to change products / y, and most buyers recognize these differences as having value,
2.Buyers' needs and/or ways to use the product are different,
3. A small number of competitors take a similar approach to differentiation.
As a rule, differentiation provides a longer-term competitive advantage when it is based on:
- technical perfection;
- quality of products;
- excellent customer service.
Such distinctive features are perceived and valued by customers, and moreover, the skills and experience required to produce these features are difficult to copy and profit from by competitors.
Ways to give the product distinctive consumer properties:
- reducing consumer costs for the use of goods,
- increasing the efficiency of using the product by the consumer,
- giving consumer properties that provide an intangible advantage,
- creation of additional customer value due to competitive opportunities that are not, and cannot be with competitors.
Disadvantages of the strategy:
- there is no guarantee that differentiation will bring competitive advantage,
- it is possible to quickly copy successful distinguishing features.

3. Best Cost Strategy - increase in customer value due to higher quality at prices at the level of competitors and below. By choosing this strategy, the company must reduce costs and, accordingly, prices, while maintaining or improving product quality. Implies a focus on low costs while providing customers with more than the bare minimum acceptable quality, service, characteristics and attractiveness of the product. Competitive advantage lies in proximity to the parameters "quality - service - characteristics - attractiveness" and cost superiority over competitors.
Distinctive features of companies that successfully implement the strategy of optimal costs are:
- the ability to develop and implement additional product attributes at a lower cost;
- offer products that are different from competitors' analogues at prices acceptable to the buyer.
The strategy has the greatest appeal in terms of the possibility of competitive maneuvering. It provides an opportunity to create exceptional customer value by balancing low cost and differentiation strategies. Therefore, it allows the firm to leverage the competitive advantage of both one strategy and the other, creating superior purchasing value.
Disadvantages of the strategy:
There is a risk of being between enterprises with the same two strategies,
- cost leaders can force the company out of the segment of price-sensitive buyers,
- those who use broad differentiation pushes the company out of the segment, ullt value quality and custom design.

4. Focused (niche) strategy based on low costs - Orientation of the enterprise to a narrow segment of customers and crowding out competitors due to lower production costs.
5. Focused (niche) strategy based on product differentiation - focusing on a narrow segment of customers and crowding out competitors by offering products that better meet the needs of customers.
Their differences are that they are focused on a narrow part of the market. A target segment or niche can be defined based on geographic uniqueness, special requirements for the use of the product, or specific characteristics of the product that are attractive only to that segment. In this strategy, you can achieve an advantage if:
1) have > lower costs than competitors,
2) be able to offer consumers something different from competitors.
A cost-focused strategy assumes that the firm is ahead of competitors due to > low production costs.
A focused differentiation strategy relies on a customer segment that requires unique product features and attributes (generally aimed at high-end buyers who want products with first-class features).
Focused strategies are attractive under the following conditions:
1. the segment has good potential for growth;
2. It is quite expensive and difficult for those operating in various segments to meet the requirements of buyers of a specialized niche;
3. the firm does not have enough resources to serve a wider market share;
4. There are many different segments in the industry, which allows the company to choose its niche according to its strengths and abilities.
Flaws:
- there is a possibility that competitors will force them out of the segment,
- the needs and preferences of consumers can be transformed into the needs and preferences of the majority,
- the segment may be attractive, which will lead to a decrease in profits.

The presence in the industry of an absolute cost advantage in the costs of old-timers compared to potential competitors means that the cost function of the old firm, for any available output, is lower than the cost function of the new firm (Fig. 3.1).

Rice. 3.1

It is clear that in such circumstances the old firm may charge a price above its average cost, but below the average cost of a potential competitor. The old firm itself will make a positive profit, but the new firm will not be able to organize break-even production in the industry.

Absolute cost advantages are created by the following factors at the disposal of the incumbent firm:

■ access to cheaper or better sources of raw materials;

■ access to specific resources;

■ using past innovations;

■ use of industry experience (learning-by-doing).

Business practice

Learning curves in economics

The learning curve creates barriers to market entry because cost differentials between new entrants and established firms make it impossible for them to compete effectively.

The learning curve is based on the experience effect. As experience in the industry is accumulated, employees of the company will learn how to complete tasks faster and more efficiently, the return on management staff will increase, and new technology and the average cost of production is falling.

Learning curves were first discovered in the aircraft industry, in the maintenance and repair of ships, on assembly lines where the same type of operations are repeated.

The learning curve in the factories of Henry Ford (1909-1923) looks like this:

Experts have established the general shape of the learning curve:

or in logarithmic form:

Rice. 3.2.

where - average costs in the initial period of time; - average costs in each subsequent period of time; - the total number of units of production produced up to the moment t; a is the elasticity of costs with respect to p; is a random error reflecting the uncertainty in the production process. The elasticity of a determines the slope of the learning curve (with the linear version) and hence the amount of cost savings. With an increase in the accumulated experience, for example, by doubling the average costs are reduced to d% from the previous level, where - shows the slope of the learning curve.

For example, tab. 3.2 shows the savings due to the learning effect.

Table 3.2. Savings due to the learning effect

are created due to the fact that old firms produce a larger volume of output than a potential competitor can master (), therefore, even with the same production technology, the same function

Rice. 3.3.

costs - the cost per unit of output of the old-timer is lower than that of a potential competitor: (Fig. 3.3).

Relative cost advantages can result from economies of scale, first-mover advantages, or learning effects, i.e. due to all those factors that allow the old firm to achieve the optimal level of output (at minimal cost) compared to a potential competitor.

Administrative barriers arise as a result of the regulatory activity of the state at different levels of administrative power - federal, regional and local government. They include the costs of firms associated with the procedure for registering enterprises, not only directly in the amount of money required, for example, to pay license fees, but also in the form of time spent on coordinating instructions from various authorities.

Administrative barriers can take the following forms:

■ licensing of firms' activities;

■ production quotas in the region or in the form of export-import quotas;

■ complicated procedure for registering enterprises and firms;

■ withdrawal procedure land plots and providing office space;

■ availability informal relationships between authorities and firms;

■ environmental standards for firms;

■ restrictions on the use of land, forest land, subsoil, mineral reserves.

Infrastructure Status the market in the form of the presence and degree of development of the transport system and the system of storage of goods in the region or country as a whole affects the possibility of moving goods within the territories and, consequently, the presence or absence of local local markets. The better the market infrastructure is developed, the more faster goods can move around the territory, the less likely the emergence of a closed local market, and the more open the food market as a whole. The lack of a properly functioning transport and storage system can prevent new firms from entering markets and forming fairly closed, territorially limited market spaces.

Product quality serves as an objective barrier to entry into the market, if accompanied by the effect of the reputation of the old firm or serves as an expression of the learning effect - an established system of relations with consumers.

When we are talking about durable goods or fundamentally new goods, the quality of which is difficult to assess before purchase, then the purchase of goods from an unfamiliar company acts as an irreversible cost for buyers. Buyers prefer to buy new product already familiar from the previous positive experience of buying a company than risking your money. In this regard, for the new company, there are additional costs for "educating" consumers and creating an appropriate reputation. All this complicates the process of entry of new firms into the industry.

Criminalization of the economy. If the functioning of firms depends on having connections with mafia groups, then the penetration of new firms into the markets will be difficult due to the need to bear the additional costs of establishing relations in the criminal world. In addition, the higher the criminalization of the economy as a whole, the higher the likelihood of physical elimination of a competitor, which also discourages the entry of new firms.

• Ghemawat, R. Harvard Business Review / R. Ghemawat. -1985.

The main competitive advantage in all situations is cost savings. This advantage is especially evident in a market where there are many price-sensitive consumers.

Cost advantage goal– creating a sustainable advantage, either:

1) by offering lower prices and thus increasing its market share at the expense of competitors;

2) by obtaining a larger market sale according to the current market environment.

However, one should not strive to reduce costs too actively, as the company's products can become so simple that they lose their appeal to consumers.

But one should strive to ensure that the costs are lower than those of competitors, moreover, throughout the entire production chain. In practice, the following ways to achieve this goal are distinguished:

1. More efficiently than competitors use the resources available in the entire production cost chain and manage the factors that affect costs.

2. Restructure the cost structure in such a way as to exclude some elements that create large costs.

Factors affecting costs can be divided into two categories:

1. Structural cost factors that depend on the fundamental economic nature of the business.

2. Management cost factors, which come from how well organizations manage.

Structural factors

1. The presence of positive or negative economies of scale, for example, an increase in local market share may reduce the cost of selling and marketing one product, while an increase in national market share may lead to a negative effect.

2. Learning effect - companies gain experience rational use resources. The effect of learning depends on management's attention to the possibility of benefiting from the experience of both the firm itself and other market participants. Savings on costs becomes a law, which is called the law of experience.

Management Factors

1. Advantages and Disadvantages of the First Sales Attempt - Sometimes the first sale can support your brand name at a lower cost than the second. In this case, you should not focus on this success.

2. Capacity Utilization Ratio - With more full capacity utilization, indirect costs and overheads are spread over a large volume of production and increase the efficiency of fixed capital.

3. Strategic choice and operational decision - it is possible to influence the company's costs.

9.1. Choosing a strategy based on portfolio analysis: a matrix approach.

For development strategies different methods (models) are used.

In a market economy, portfolio models of strategy analysis are widely used. Analysis of the economic portfolio of an enterprise is a condition for effective strategic planning. It is necessary to assess the state of all the enterprises that are part of the enterprise and its other components (branch of the company, product range, or one branded product, etc.) to reveal more or less profitable production and make decisions about what to do with each of them individually.

It is important for the firm to invest its main resources in the most profitable productions and reduce or even stop investing in weak ones. It can keep its economic portfolio in combat readiness by strengthening or adding to growing industries and getting rid of weak ones.

The effect of this or that product (lines of activity) depends not only on the enterprise, but also on how this product will be accepted by the market. This interdependence is expressed through the concept of " commodity market", which reflects a specific product in a specific market. Portfolio analysis allows you to evaluate the effectiveness of each product market, which is necessary to determine the strategic behavior of the company on it.

portfolio analysis- this is a condition for the distribution of the company's resources between the various markets of the product in which it is presented. There are different methods of portfolio analysis

First method.Classic portfolio model is the BCG matrix, based on a comparison of growth rates and market share. This model in a certain way reflects the position of a particular type of business in the strategic space. See Appendix (1)

Primary focus in the BCG model (BCG) focuses on the firm's cash flow. It is believed that the level of income or cash flow is in a very strong functional dependence on the growth rate of the market and the relative share of the firm in this market. The growth rate of a firm's business determines the rate at which the firm will use cash.

In the BCG model, the main commercial goals of the company are assumed to be the growth of the rate and mass of profit. At the same time, the set of feasible strategic decisions regarding how these goals can be achieved is limited to four options:

1. Increasing the share of the firm's business in the market.

2. Struggle to maintain the firm's business share in the market.

H. Maximizing the position of the firm's business in the market.

4. Exemption from this type of business.

The decisions that the BCG model suggests depend on the position of the particular type of business of the firm in strategic space defined by two coordinate axes, one of which is used to measure market growth rate the corresponding product and the other for measuring the relative share of the company's products in the market the product in question. This method has advantages and disadvantages.

Second method. The GE McKinsey model is a nine-cell matrix. See Appendix (2). In this matrix, the analysis is carried out according to the following parameters: attractiveness of SBAs and position in competition. The matrix allows us to consider the dynamics of the second factor - attractiveness of strategic business zones. There is a formula for calculation.

Arthur D. Little Matrix (ADL), SM Appendix (3), unlike the BCG matrix, is based on two variables reflecting sector maturity (industry life cycle) and position relative to competitors. In the strategic model of Arthur D. Little, the choice of strategy for each SBA can be carried out depending on the phase life cycle sector (not product) and the competitive position of the enterprise in the market. Expert assessments showing the maturity of the sector and the position in relation to competitors. on the basis of the accepted heuristic position, determine the direction of the enterprise, its forms economic activity. This is the basis of the company's product policy.

Third Method Shell's Directed Policy Matrix has a superficial resemblance to the GE-McKinsey Matrix, but at the same time is a development of its own. business strategic positioning ideas, included in the BCG model. The Shell matrix is ​​a two factor 3x3 matrix. It is based on assessments of both quantitative and qualitative business parameters. So, in essence, the Arthur D. Little (ADL) and McKinsey models are an improved version of the BCG matrix, being at the same time multifactorial matrices CM Application (3)

Fourth method-Ansoff's product/market development model allows you to use several strategies at the same time. It is based on the premise that the most appropriate strategy for intensive sales growth can be determined by the decision to sell existing or new products in existing or new markets. This matrix serves as a diagnostic tool and is intended to describe the possible strategies of the enterprise in the conditions; growing market.

The development of a strategy is carried out at the highest level of management and is based on the solution of the above tasks. At this stage of strategic planning, evaluate alternative ways of doing things companies and choose the best options to achieve their goals. On the basis of the analysis carried out in the process of developing a strategy, strategic thinking is formed by discussing and agreeing with the management apparatus on the concept of the development of the company as a whole. Recommendations are given for new development strategies, formulation of draft goals, preparation of directives for long term planning, development of strategic plans and their control.