Strategy Options for a Fragmented Industry
1. Suitable competitive strategy options in a fragmented industry include:
a. Constructing and operating “formula” facilities – This strategic approach is frequently employed in restaurant and retailing businesses operating at multiple locations.
b. Becoming a low-cost operator – When price competition is intense and profit margins are under constant pressure, companies can stress no-frills operations featuring low overhead, high productivity/low-cost labor.
c. Specializing by product type – When a fragmented industry’s products include a range of styles or services, a strategy to focus on one product or service category can be effective.
d. Specialization by customer type – A firm can stake out a market niche in a fragmented industry by catering to those customers who are interested in low prices, unique product attributes, customized features, carefree service, or other extras.
e. Focusing on a limited geographic area – Even though a firm in a fragmented industry cannot win a big share of total industrywide sales. It can still try to dominate a local or regional geographic area.
2. In fragmented industries, firms generally have the strategic freedom to pursue broad or narrow market targets and low-cost or differentiation-based competitive advantages. Many different strategic approaches can exist side-by-side.
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