Classify the Competitive Strategies Employed the Blue Chips You Own
Action of the week
Background: Companies have only three fundamental options for creating value for their customers: offering products and services similar to their competitors’ but at lower prices (cost leadership), selling better products and services at comparable prices (differentiation) and tailoring products and services to narrowly defined customer groups (focus).
Rationale: Companies that fail to build a sustainable moat through products and services that deliver superior customer value cannot achieve blue chip status (long-term business success).
Action: For the blue chips in your portfolio, assess the breadth of their customer base (narrow, broad) and their source of competitive advantage (differentiation, cost leadership).