Four ways for enterprises to make profits.
1, low cost
Cost-leading strategy (also known as low-cost strategy) Cost-leading strategy is perhaps the clearest of the three general strategies. Under the guidance of this strategy, enterprises decided to become low-cost manufacturers in their industries. The business scope of an enterprise is very wide, serving many industrial departments, and may even operate businesses belonging to other related industries.
The management of an enterprise often plays an important role in its cost advantage. The source of cost advantage varies with industrial structure. They can include the pursuit of economies of scale, patented technology, preferential treatment of raw materials and other factors.
When the price of a cost-leading enterprise is equal to or lower than that of its competitors, its low-cost status will be transformed into high income. Although cost-leading enterprises rely on cost leadership to gain competitive advantage, they must compare with their competitors if they want to become the leader with above-average economic benefits.
A favorable position of equal or similar value obtained on the basis of unique products. The success of cost leadership strategy depends on the skills of enterprises to actually implement the strategy day after day. Cost leadership is not the same as the lowest price. If the enterprise falls into the misunderstanding that the price is the lowest and the cost is not the lowest, what it can only get is to push itself into the endless price war.
Because, once the price is reduced, competitors will also reduce the price, and because the cost is lower than their own, there is more room for price reduction, which can support the price war for a longer time.
2. Difference
Product differentiation brings higher income, which can be used to cope with the pressure of suppliers and relieve the pressure of buyers. When customers lack choices, their price sensitivity is not high. Finally, companies that win customer loyalty by adopting differentiation strategy are in a more favorable position than other competitors in the face of the threat of substitutes.
Achieving product differentiation sometimes conflicts with efforts to occupy a larger market share. Enterprises often need to be psychologically prepared for the exclusiveness of this strategy, that is, this strategy and increasing market share cannot be taken into account. More generally speaking, it is always expensive to establish differentiated activities, such as extensive research, product design, high-quality materials or careful customer service. Then realizing product differentiation means at the cost of cost position.
If the differentiation strategy is successfully implemented, it will become an active strategy for an industry to win high-level income, because it has established a defensive position to deal with five competitive forces, although its defensive form is different from cost leadership. Porter believes that the implementation of differentiation strategy sometimes conflicts with the activities of striving for greater market share.
The implementation of differentiation strategy often requires enterprises to be psychologically prepared for the exclusiveness of this strategy. This strategy cannot be balanced with the growing market share. The activity of establishing company differentiation strategy is always accompanied by high cost. Sometimes, even if customers in the whole industry know the unique advantages of the company, not all customers will be willing or able to pay the high price required by the company.
Step 3 focus
The cost leading strategy and differentiation strategy are oriented to the whole industry and carry out activities within the whole industry. Centralized strategy is to carry out intensive production and operation activities around a specific goal, which requires more effective services than competitors. Once the company chooses the target market, it can form a centralized strategy through product differentiation or cost leadership.
In other words, companies that adopt a focus strategy are basically companies with special differentiation or special cost leadership. Because of the small scale of such companies, companies that adopt centralized strategy often cannot adopt differentiated and cost-leading methods at the same time.
If a company adopting centralized strategy wants to achieve cost leadership, it can establish its own cost advantage on special products or complex products. It is difficult to standardize the production of this kind of products, to form economies of scale in production, and to have the advantage of experience curve.
If a company adopting a centralized strategy wants to achieve differentiation, it can use all differentiation methods to achieve the expected goal. Different from differentiation strategy, companies adopting centralized strategy compete with companies implementing differentiation strategy in a specific target market, but not with competitors in other market segments.
4. Regional leadership
Regional development strategy refers to the enterprise according to the internal and external environment of the enterprise, as well as the analysis of different regional markets faced by the enterprise, to determine the clear key development areas of developers, to determine the development strategies and measures of key development areas and non-key development areas, and to put forward the regional arrangement of regional repeated construction projects in the near future.
The formulation of regional development strategy is actually a high-level and overall macro-planning based on regional development conditions, further development requirements and development goals. It is a major decision made after analyzing and judging the overall situation of regional development. Its core is to solve the basic development goal of the region in a certain period of time and the way to achieve this goal.