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Hybrid Strategy

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Samantha Petrie

on 24 March 2015

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Transcript of Hybrid Strategy

Hybrid Strategy
What is Competitive Strategy
“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value”

(Johnson et al., 2011:4)

‘There is a body of evidence that suggests that strategy is based on a hybrid (mixture) of differentiation, price and cost control’

(Campbell et al., 2011:204).

What is Hybrid Strategy

Essentially, Hybrid is being ‘stuck in the middle’



Organizations that focuses on both low cost-leadership and differentiation (Baroto et al., 2012)

Examples of Hybrid Strategies
Advantages
Disadvantages
It can be an effective way of entering a new market.
Allows for a best-cost provider strategy.
It not only feasible but will also generate increased performance.

Likely to increase costs
No clear strategy
Lacks market share
The Market
Perfectly competitive market with large amounts of airlines operating in particular price segments
UK market - Ryanair and Easyjet dominate low cost
BA and American Airlines dominate Premium market.
What do they compete on?
Price
Luxury
Safety
Speed
Time/ Route
Customer Service


British Airways Company Profile
Premium airline covering both differentiation and cost leadership strategies.
Main competitors : Low cost airlines (Ryanair)
Premium Airlines (Emirates/Virgin)
Adopts two strategies: Differentiation
Cost Leadership
Therefore combines the two and adopts a hybrid strategy
Problems
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Price
Perceived Quality
Unable to compete with low cost airlines
Therefore focuses on providing a higher quality for a slightly higher price


Unable to obtain a large market share from operating in a low price market so compete in other markets
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Perceived Quality
Price
Toyota Company Profile
Cost Leadership


Differentiation
They have the ability to produce cars of great quality at bests prices, thereby providing value for money to the customers.

A close relationship with suppliers and good distribution channels

Offering a wide range of cars from low cost to high. Therefore, marketing for everyone.

Cost Leadership
Differentiation
Toyota differentiated themselves from the market by three main areas:

Access to unique technology allowed them to produce Hybrid cars.

Strong brand

Good design and high quality.
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Combines cost leadership and differentiation strategy to create a hybrid approach.
The implementation of a combined competitive strategy results in multiple sources of competitive advantage
Bowman's Clock
(Johnson et al., 2011)
(Campbell et al., 2011)
Cost Leadership
Produce at a low cost to be able to charge a low price and maintain a competitive advantage
Company Profile
Since the beginning, Ikea took a different path in providing home furnishings that combine:

Good Design
Good Quality
Good Function
Low Prices

This allows them to save money for themselves and their customers.
Differentiation Strategy
Promotes the brand through focusing on quality and design.

This allows them to differentiate and compete on quality.
Company Profile
When customer preference changed in the 1990's, Nike's market share slipped along with their profits.

To correct this, they adopted a hybrid strategy
Hybrid Strategy
In order to adopt a hybrid strategy, Nike cut costs and therefore could moderately price their products.

They also developed new distinctive products that were designed to differentiate from the competition. (Adidas)
Why this strategy is hard to imitate
Hybrid involves several factors relating to low cost and differentiation of a product.

This makes it harder for a competitor to copy as they would need to adopt all the aspects of the companies strategy (both differentiation and low cost).

Full transcript