Focus strategy

Focus Strategy
Prof. (Dr.) Nitin Zaware
Prof. (Dr.) Nitin Zaware 1

 There could be a small businesses or
involved in a single business or a large, complex
and diversified conglomerate with several different
businesses.
 The corporate strategy in these cases is
about the basic direction of the firm as a whole. In
the case of the small firm, it could mean the
adoption of courses of action that would yield a
better profit for the firm.
 Business level strategies are concerned with
a firm’s industry position relative to those of
competitors.
 Corporate-level strategies are about the
choice of direction that a firms adopts in order to
achieve its objectives.
2Prof. (Dr.) Nitin Zaware

Focus Strategy:
 The concept of generic strategies for gaining
competitive advantage has received considerable
attention recently in the business policy field.
Competitive Strategy, a modern classic of business
thinking, provides a strong conceptual foundation for
developing corporate strategy.
 Generic competitive strategies are the marketing
strategy any of three strategies for marketing products
or services: cost leadership, differentiation, and focus.
 The Focus strategy implies third focuses on a
specific product market segment with the goal of
establishing a monopoly.

Focus Strategies:
A focus strategy is an integrated set of actions that
is designed to produce or deliver products or
services that serve the need of a particular
competitive segment.
Types of Focus Strategies :
Types
Focused Cost
Leadership
Strategy
Focused
Differentiation
Strategy

Types of Focus Strategies:
i) Focused Cost Leadership Strategy :
Some firms seek to provide customers with affordable
solutions for better living through use of the focused
cost leadership strategy.
ii) Focused Differentiation Strategy :
Other firms implement the focused differentiation
strategy. There are number of ways to differentiate
products or services to serve the unique needs of
particular market segments.

Achieving Focus :
Focus is essentially concerned with identifying a
narrow target in terms of markets and customers.
The firm implementing a focus strategy can
adopt the following practices:
1) Identification Gaps :
A firm can choose specific niches by
identifying gaps not covered by cost leaders
and differentiators.
2) Superior Skills :
A firm can create superior skills for catering
to such niche markets.

3) Superior Efficiency :
A firm can create superior efficiency for
serving such niche markets.
4) Achieving Lower Cost :
A firm can achieve lower cost or
differentiation as compared to the
competitors while serving such niche
markets.
5) Use of Innovative Ways :
A firm can develop innovative ways to
manage the value chain which are different
from the ways prevailing in an industry.

Benefits of Focus Strategies
Protection from Competition
Capacity to Absorb Price Increments
Less Possibility of Shifting Loyalty
Substitute Barrier
Effective Entry Barrier

Benefits of Focus Strategies
1) Protection from Competition :
A focused firm is protected from competition to the
extent that the other firms, which have a broader
target, do not possess the competitive ability to
cater to the niche markets.
2) Capacity to Absorb Price Increments :
Focused firms buy in small quantities, so powerful
suppliers may not evince much interest. But price
increments upto a certain limit can be absorbed
and passed on to the loyal customers.

3) Less Possibility of Shifting Loyalty :
Powerful buyers are less likely to shift loyalties as they
might not find others willing to cater to the niche markets
as the focused firms do.
4) Substitute Barrier :
The specialization that focused firms is able to achieve in
serving a niche market acts as a powerful barrier to
substitute products/services that might be available in the
market.
5) Effective Entry Barrier:
Due to the focused specialization, the competence of the
focused firms acts as an effective entry barrier to
potential entrants into the niche markets.

Limitations of Focus Strategies
Rival’s Move
Transient Nature of
Niches
Cost Configuration
Difficult to
Move onto
Other
Segments
Difficulty in
Achieving
Competence

Limitations of Focus Strategies
1) Difficulty in Achieving Competence :
First of all, serving niche markets requires the
development of distinctive competencies to serve
those markets. The development of such distinctive
competencies may be a long-drawn and difficult
process.
2) Difficult to Move onto Other Segments :
Being focused means commitment to a narrow
market segment. Once committed, it may be difficult
for the focused firm to move onto other segments of
the market.

3) Cost Configuration :
A major risk for the focused firm lies in the
cost configuration. Typically, the costs for
the focused firm are higher as the markets
are limited and the volume of production
and sales small.
4) Transient Nature of Niches :
Niches are often transient. They may disappear
owing to technology or market factors. For
instance, a new technology may make the
process of making the niche products easier. In
the same way, there might be a shift in the
consumer’s needs and preferences causing them
to move to other products. Sometimes the rising
costs of niche products may cause the customers
to move to the lower-priced products of cost
leaders.

5) Rival’s Move :
Rivals in the market may sometimes out-focus
the focused firms by devising ways to serve the
niche markets in a better manner.

Focus strategy

Recommended

More Related Content

What's hot (20)

Viewers also liked (12)

Similar to Focus strategy (20)

More from Prof.(Dr.) Nitin Zaware (11)

Recently uploaded (20)

Focus strategy