Name and describe the appropriate defensive strategic market plans for a business operating in a very unattractive market

Question

At which level of competitive advantage would each strategy be appropriate? Within those types, what are the strategies and when should each be used?

Answer 1

Regardless of a business's competitive advantage, when faced with a very unattractive market, only four defensive strategies are appropriate: protect position, monetize, harvest, or divest.
(1 ) High Competitive Advantage. The protect position is the most appropriate strategy. The objective of the protect position strategy is to maintain sales. If a business has a very strong competitive advantage in this very unattractive market, then investing to protect a high-share position is most appropriate.
(2 ) Moderate Competitive Advantage. Monetize, harvest, or divest strategies would be appropriate for a business with a moderate competitive position operating in a very unattractive market. Specific strategies could be to manage for cash flow if the business can operate with minimal marketing resources and typically low prices, extracting the maximum short-run cash flow from the market. At the point when this can no longer be accomplished at a desired level of cash flow, a business may elect to pursue a harvest or divest strategy.
When additional profits can be made with a slow exit, a harvest strategy can be a good source of short-run profits. A harvest strategy involves improving short-run performance by reducing marketing and sales expenses and systematically raising prices.
But if a business is losing money in its market, management might be more inclined to pursue a fast market exit strategy and divest the business's share position as quickly as possible. To divest a share position, a business can either find a buyer for the business or simply close down the operation and sell its assets.
(3 ) Very Weak Competitive Advantage. Harvest and divest strategies are most appropriate and are discussed above.