...Dec. 2013), PP 11-17 www.iosrjournals.org Porter’s Generic Competitive Strategies Ritika Tanwar Assistant Professor Department of Commerce Dyal Singh College (M) Delhi University Abstract Generic Competitive Strategy: Basically, strategy is about two things: deciding where you want your business to go, and deciding how to get there. A more complete definition is based on competitive advantage, the object of most corporate strategy: “Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firm's cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation.” Michael Porter Competitive strategies involve taking offensive or defensive actions to create a defendable position in the industry. Generic strategies can help the organization to cope with the five competitive forces in the industry and do better than other organization in the industry. Generic strategies include ‘overall cost leadership’, ‘differentiation’, and ‘focus’. Generally firms pursue only one of the above generic strategies. However some firms make an effort to pursue only one of the above generic strategies. However some firms make an effort to pursue more than one strategy at a time by bringing out a differentiated...
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...Porter’s Generic Strategies Porter’s notion on “stuck in the middle” or “hole in the wall” is debatable, it being mutually exclusive. It might be true in some cases but not all the time. Even beyond Porter’s generic strategies, Toyota has been operating and already proven that it’s possible to be a low cost producer of a differentiated product. It was able to achieve leadership in North America, surpassing General Motors. They continuously find ways to reduce production costs and at the same optimize its process so that it could introduce new models faster than its competitors. They’re known for their Toyota Production System (TPS) which other vehicular companies were trying to mimic. This TPS is the main reason why there’s Just-In-Time (JIT) and Lean Manufacturing system in the manufacturing industry today. Toyota used these two manufacturing methods to gain competitive advantage over competitors. In JIT, Toyota build vehicles based on immediate market demands rather than anticipation on future market demands. There’s no overstocking. This strategy results in efficiency and quality. It is mentioned above that cost leadership gains competitive advantage through efficiency while differentiation gains its competitive advantage through quality. This is a proof that cost leadership and differentiation are not mutually exclusive. And so is true with Lean Manufacturing. Its concept is eliminating those processes that will not add value (differentiation) to the product that a customer...
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...Analysis Of Porter's Generic Strategies Strategic Themes Provide product that is on-trend, differentiated, distinctive and inspired by select popular fashion trends and pop culture for all of our target customers, but with a primary focus on expressive women and expressive moms. Improve brand marketing effectiveness by implementing a “house of brands” architecture that covers all of our major customer segments and builds distinctiveness and focus in our product assortment. Provide a great shopping experience through improved customer engagement, and leveraging our real estate to support new store formats consistent with the repositioning of our brand. Maintain efficient operations by building greater speed and flexibility into the supply chain to deliver the right product to the right store at the right time in the appropriate proportions across the approximately 4,600 store network. On-Trend Targeted Product We identifies fashion trends timely and integrates these insights into on-trend product in our stores. Generic Strategy - Porter Porter’s generic strategies: low cost, differentiation, specialization. Key stakeholders & their influence. PEST model, macro environment. – Five Forces model, micro/industry environment. Porter's Five Forces Model And Three Generic Strategies Porter's Five Forces Model Porter's Five Competitive Forces model is a framework made by Michael Porter that is used by businesses when thinking about business strategy and the impact...
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...Executive Summary This report was commissioned to formulate a strategy for growth and expansion of an Australian water bottle company named as Cooroy Mountain Spring Water according to the request of its management. Thus, the report draws attention to examine the current strategy of Cooroy in its business level. Then it analyses the organization’s ability and incentives for growth especially in international market. Investigations reveal there is immense growth potential in the bottle water market across the world. According to Hubbard’s 5Qs and Porter’s Generic Strategies Cooroy is following a growth and differentiation strategy currently in its business level. Due to product development, geographical expansion, etc. the report recommends restructuring organizational structure to a divisional structure for effective management and success of the business as organizational structure must align with organizational strategies. In the entrance to the foreign market the report suggests a Global strategy to the firm as its corporate level strategy according to the findings of Porters’ Diamond and incentives for international expansion. Finally the paper recommends establishing in China initially with a Wholly Own Subsidiary entry mode with future prospects of growth and expansion in Asia Pacific Region. Moreover, the report’s action plan for strategy formulation presents a guideline for effective strategy implementation. The report also investigates the fact that the analysis...
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...Introduction. The essence of business development and commercialisation can be said to be market and growth strategies. Porter’s Generic strategies can be used for this purpose. A well thought out market strategy can minimise risk and increase profits, which is of key importance especially for start up companies with little funding and resources. In order to grow, companies need to adopt strategic frameworks, which can if understood and used in the right way, help the company decide on their next step in the market place. I will first give a brief introduction to Porter’s Generic strategies theories and discuss advantages and disadvantages for using these framework in business development and commercialisation projects in this case Men’s clothing brand. Porter’s generic strategies. According to Michael Porters “Competitive strategy: Techniques for analysing industries and competitors” from 1980, one can use Porter’s generic strategies theories to find the optimum position for a company within an industry. Often, a determinant of a company’s profitability can be said to be the attractiveness of an industry in which it operates. This mean that companies that manage to place them self correctly can generate more profits than companies who have not thought about their optimal position. The framework is called generic because it is not industry dependent. A company should reflect on its strengths and weaknesses in order to find its competitive advantage, and this unique strength...
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...Introduction The purpose of this case review is to summarize the case and identify the key issues. We also will evaluate how Google's mission statement is related to its business strategy, how their information systems strategy supports its business strategy, and how Google's organizational strategy supports its business strategy. Additionally we will identify which of Porter’s three generic strategies is Google employing. Finally we will analyze Google's strategy and the type of market disruption it has created using a dynamic environment perspective. Case Summary Google Inc was founded in 1998, and has grown to serve hundreds of thousands of users and customers around the world by providing access to a free search engine that locates information on the World Wide Web. Their mission is to organize the world’s information and make it universally accessible and useful. Google has created a simple but successful business strategy that is focused on attracting Internet users to their search engine and earning revenue from targeted advertisement. According to Sounders (2013) Google is operating on a simple but innovative business model of attracting Internet users to its free search services and earning revenue from targeted advertisement. They are accomplishing this task through the use of their AdWords and AdSense programs. According to Sounders (2013) AdWords enables businesses to place ads on Google and its network of publishing partners and AdSense allows them to push advertisements...
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...ANALYSIS OF MICHAEL PORTER’S GENERIC STRATEGIES AND ITS USAGE IN A GLOBALIZED BUSINESS ENVIRONMENT THESIS - BACHELOR HONOURS IN BUSINESS ADMINISTRATION DIANA MARIA CAMACHO ARIAS TYPE OF DOCUMENT: DISERTATION TO OBTAIN THE DEGREE OF BACHELOR HONOURS IN BUSINESS ADMINISTRATION APPROVED BY UNIVERSIDAD DEL ROSARIO – FACULTAD DE ADMINISTRACION INSTITUTION: ÉCOLE INTERNATIONALE DE MONTPELLIER FRANCE, MONTPELLIER, MAY OF 2009 ANALYSIS OF MICHAEL PORTER’S GENERIC STRATEGIES AND ITS USAGE IN A GLOBALIZED BUSINESS ENVIRONMENT THESIS - BACHELOR HONOURS IN BUSINESS ADMINISTRATION DIANA MARIA CAMACHO ARIAS TYPE OF DOCUMENT: DISERTATION TO OBTAIN THE DEGREE OF BACHELOR HONOURS IN BUSINESS ADMINISTRATION APPROVED BY UNIVERSIDAD DEL ROSARIO – FACULTAD DE ADMINISTRACION TUTOR: TIDIANE AW INSTITUTION: ÉCOLE INTERNATIONALE DE MONTPELLIER FRANCE, MONTPELLIER, MAY OF 2009 DEDICATION I dedicate this dissertation to every person that has allowed it to be possible with the critics, to the teachers and tutors that have awaked in me the interest in this topic and also the passion for the businesses strategy, to my family that has always supported me to achieve my goals and to develop myself as a human being and also as a professional, and finally but not less important to Gabriel that has been a huge support to bring this dissertation to a satisafactory end. ACKNOWLEDGEMENTS This thesis would not have been possible without the generous assistance of the following...
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...Figure 2.2: foundation of aligned supply chains CHAPTER 2.3: PORTER’S ANALYSIS According to Porter, companies must look for having a superior comparable performance regarding competitors in the same industry, and described that the competitive advantage is to have a profitability level greater than those in the industry on the long run. He also described the cost leadership and the differentiation as the two types of competitive advantage a company can have, depending on the sources on which it is based on. In 1985, Professor Porter defined competitive advantage as the ability of adding value in the eyes of consumers, meaning the value perceived might be superior than the sum of the amount of costs related to the production processes. Subsequently, Porter’s conception of strategy is that it is a matter of competitive position, that a company creates by differentiating themselves in the eyes of its valuable customers, including a process of adding value along a structure of different activities interrelated in a way imperceptible for competitors, and so that this complex mix differs from those created or used by competitors. By 1980, Porter defined the competitive strategy as all the offensive or defensive actions a company does in order to create a favorable and sustainable position within an industry with the objective of having a superior performance which at the end will be convert as a considerable ROI (return over investment). Additionally, he explained that these actions...
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...Service…………………………………………. | 5 | Buyer Power…………………………………………………………………………. | 6 | Supplier Power………………………………………………………………………. | 7 | Rivalry Among Existing Competitors………………………………………………. | 7 | The Threat of New Entrants………………………………………………………… | 8 | Cost Leadership Generic Strategy…………………………………………………… | 8 | Differential Generic Strategy………………………………………………………… | 9 | Focus Generic Theory……………………………………………………………….. | 9 | Ebusiness……………………………………………………………………………………. | 10 | Conclusion…………………………………………………………………………………... | 11 | References…………………………………………………………………………………… | 12 | Abstract The purpose of this paper is to discuss business decisions and business strategies to gain competitive advantage based on Michael Porter’s Five Force Model and Porter’s Three Generic Strategies. The Five Force Model are buyer power, supplier power, threat of new entrants, threats of substitutes of products and services and rivalry among existing competitors. Further discussion includes determining which Porter’s Three Generic Strategies to use to rebuild a failing eatery located downtown called Broadway Café. The Three Generic Strategies are Cost Leadership Generic Strategy, Differential Generic Strategy and Focus Generic Strategy. I will also discuss how ebusiness can help the Broadway Café achieve a competitive advantage. Focus of ebusiness will be marketing, finance, accounting, sales, customer service and human resources....
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...Chapeyama Porter’s five forces Effectiveness of generic strategies The study of strategic management is quite stimulating. It gives a person insight in a lot of leadership and managerial roles. One such aspect I have come across is that of generic strategies. This has been quite stimulating to me as it relates to some questions I have had in the past. The question related to the effectiveness of applying human resources systems and strategies across many companies in various continents. After a long time of studying such a scenario, I concluded that having human resources systems that are used the world over would not be effective because of the diverse cultures that are found in the world. But in some field such as accounting there are standards that are applied world over. So what about generic strategies? Can these really be effective across industries, across continents and in varying business sizes and scope? This essay will answer these questions in a very simple way. The first thing to understand is what a generic strategy is. Generic strategy refers to the use of predetermined strategy, based on some basic principles and assumptions, that if applied would lead to business success. A generic strategy is an outline of what a firm must or can do so as to be successful, disrespectful of the industry or nature of business of that firm. The question is could all industries and firms be able to use prescriptions of a generic strategy and be successful. Examples of generic strategies...
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...A CRITIQUE OF PORTER’S COST LEADERSHIP AND DIFFERENTIATION STRATEGIES Y. Datta Ph.D., State University of New York at Buffalo Professor Emeritus College of Business Northern Kentucky University Highland Heights, KY 41099 (USA) 7539, Tiki Av. Cincinnati, OH 45243 USA Tel: (513) 984-1032 [Home] Fax: (513) 984-1032 E-Mail: datta@nku.edu A paper accepted for presentation at the 9th Oxford Business & Economics Conference to be held in Oxford, England, June 22-24. Table of Contents A Critique of Porter’s Cost Leadership and Differentiation Strategies 4 ABSTRACT 4 Key Words 4 INTRODUCTION 5 COST LEADERSHIP STRATEGY 5 Major Reliance on Modern Capital Equipment 7 Relying on the Experience Curve to Underprice Competition Risky 7 A Cost Leader Cannot Ignore Differentiation 8 No Such Thing as a "Commodity": Everything Can Be Differentiated 9 High Market Share a Prior Condition for Cost Leadership? 10 Porter Identifies High Market Share with Cost Leadership Strategy 10 Differentiation--Not Cost Leadership Alone--Behind GM’s and Whirlpool’s Success 11 “Low-Cost” or “Low-Price” Strategy? 12 Thompson and Strickland’s Low-cost Provider Strategy 14 Internal Orientation of Cost Leadership Strategy 14 DIFFERENTIATION STRATEGY 15 Superiority of Differentiation over Cost Leadership Strategy 16 Porter: Differentiation and High Market Share Incompatible 17 Differentiation Compatible with High Market Share--and Low Cost...
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...Due to over 18% of people in Australia participated in fitness activities in 2010 (Fitness Australia 2012), this report focuses on finding a better gym model. Firstly, it provides an overview of two 24/7 gyms called Anytime Fitness (A) and Jetts (J). Secondly, it uses one critical thinking tool and two business concepts to analyse the internal and external factors. Finally, it draws a conclusion about which gym may have a better future. Case Study Overview This part summaries the background information and differences in terms of scale, geographical distribution, operation mode, revenue, satisfaction between two gyms. According to Anytime Fitness and Jetts official website (2014), the number of A’s members is 10 times larger than J’s all over the world. In addition, Anytime Fitness covers 16 countries and it has clubs in the North Territory. However, statistics from Entrepreneur (2014) show an unbalanced distribution of A, with the number of nearly 75% (1839/2459) franchise clubs located in USA. In contrast, J focuses more on domestic market, especially in Queensland. According to GymsGuide (2014), J has over 70 outlets in Queensland out of 191 outlets in Australia. Moving to operation mode, both of them are franchise. The franchise growth of A and J are 219% and 166% respectively (Business Review Weekly 2013). Furthermore, although J’s fixed fee of joining and access is approximately $39 higher than A’s, the monthly fee is lower and there is no lock-in contracts. Heathcote...
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...2/27/12 Generic Competitive Strategies - eNotes.com Generic Competitive Strategies Generic Competitive Strategies Three of the most widely read books on competitive analysis in the 1980s were Michael Porter's Competitive Strategy, Competitive Advantage, and Competitive Advantage of Nations. In his various books, Porter developed three generic strategies that, he argues, can be used singly or in combination to create a defendable position and to outperform competitors, whether they are within an industry or across nations. Porter states that the strategies are generic because they are applicable to a large variety of situations and contexts. The strategies are (1) overall cost leadership; (2) differentiation; and (3) focus on a particular market niche. The generic strategies provide direction for firms in designing incentive systems, control procedures, and organizational arrangements. Following is a description of this work. OVERALL COST LEADERSHIP STRATEGY Overall cost leadership requires firms to develop policies aimed at becoming and remaining the lowest-cost producer and/or distributor in the industry. Company strategies aimed at controlling costs include construction of efficient-scale facilities, tight control of costs and overhead, avoidance of marginal customer accounts, minimization of operating expenses, reduction of input costs, tight control of labor costs, and lower distribution costs. The low-cost leader gains competitive advantage by getting...
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...Michael Porter Michael Eugene Porter who was born on May 23 in 1947. He comes from Michigan. He is the Professor of Bishop William Lawrence University at The Institute for Strategy and Competitiveness, based inside Harvard Business School. He is a leading authority on competitive strategy and the competitiveness. Michael Porter's work is recognized in many governments, corporations and academic circles globally. Michael Porter's core field is competition and company strategy. He is mainly recognized as one of the intellectual leaders in his modern strategy field and his ideologies and theories are taught in practically every business school throughout the world. His work has also re-defined thinking about concepts such as competitiveness, economic development, economically distressed urban communities, environmental policy, and the role of corporations in society. His main academic objectives focus on how a firm or a region can build a competitive advantage and develop competitive strategy; the competitiveness of nations, regions and cities; and solutions to social problems. Porter has his 3 Generic strategies, which describe how a company pursues competitive advantage across a chosen market scope. These three generic strategies are, either lower cost, differentiated, or focus. Cost leadership, product differentiation, and focus are based on choices regarding competitive scope and competitive advantage. Firms position themselves by leveraging their strengths. Michael...
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...“Outline Porter’s three generic strategies and discuss whether generic strategies can lead to sustainable competitive advantage” With many views and variations on strategy and a company’s ability to sustain competitive advantage, it seems to be generally acknowledged that Porter’s three generic strategies i.e. Low Cost, Differentiation and Focus strategies, are the most widely accepted. In my following essay I will outline these three generic strategies and discus whether or not generic strategies can lead to sustainable competitive advantage. Cost-leadership strategy, or low cost strategy allows the firm to gain competitive advantage and market share by appealing to cost-conscious consumers. They can either use a no frills approach strategy which combines an inferior product with a low price, or a low-priced strategy where they would produce a product of similar quality but sell it at a lower price. (Johnson et. al, 2009). Pursuing low product cost alone however will not sustain competitive advantage. Managers must attempt to reduce costs in other areas of the firm, such as manufacturing and distribution in order to stay ahead of their competitors. Differentiation strategies involve trying to incorporate unique features to your product or service that will allow consumers to differentiate you from your competitors. This type of strategy can be particularly useful in markets which are saturated or where consumers aren’t particularly price-sensitive. One example of...
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