BUSI690 Rothaermel Ex 2 Essay

An organization’s external environment is terribly important and must be studied and understood for the organization to truly succeed. Through such study and understanding, a manager would be able “mitigate threats and leverage opportunities” that are caused by the six segments identified as macro-level external forces: (1) political, (2) economic, (3) sociocultural, (4) technological, (5) ecological, and (6) legal (Rothaermel, 2013, pp. 56-57). Since the manager’s decisions, or firm effects, have a greater impact than those external forces mentioned only when the manager accounts for them and builds a strategy around them, the manager must be aware of and understand these forces to be

Generic strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage. Each of the three

The article is entitled Changing Generic Strategies: Likelihood, Direction and Performance Implications, and it was written by Edward Zajac and Stephen Shortell. The article was published in the Strategic Management Journal in 1989. This article was chosen because it advances the study of the idea of generic strategies. These strategies, as proposed by Michael Porter, have been highly influential in our understanding of corporate-level strategy. Yet, were a firm to respond to environmental stimuli and change strategy, there are significant implications for the firm. This article examines those implications.

A scholarly work that has received widespread attention and recognition in the Strategic Management area--and beyond--is Porter’s (1980, 1985) typology of generic competitive strategies: Cost leadership, differentiation, and focus. These three actually fall into two basic categories. The focus strategy calls for concentration on a niche or a narrow segment. But Porter says that success in this strategy can be achieved either via cost leadership or differentiation. Thus, cost leadership and differentiation are the two basic strategies in Porter’s typology. These two then are the subject of discussion in this paper.

“The greater a firm‟s ownership extends over successive stages of the value chain for its product, the greater the degree of vertical integration” (Grant, 2010, pp354). The consumer electronics industry value chain is depicted below:

According to the competitive Advantage written by Michael Porter in 1985 ‘Creating and sustaining superior performance is Generic strategies’. Generic strategies represent the varieties in strategic positions of a company. The concept of generic strategy is divided in three parts Product differentiation, cost Leadership and Focus. According to Porters company can have a focused or broad approach on product differentiation or cost leadership, in the given article Ikea and south west airlines are an example in this Ikea is based on the needs of customer group and south west airlines is based on offering a particular service variety in cost leadership, where as Neutrogena is based on product differentiation because, it is focused on sales its product distribution in drugstores and avoid price promotion. Where as Hambrick (1983a, p. 702) argue that "It is simply not accurate to say that all generic strategies are equally possible within an industry . . . any broadly 'generic ' strategy is really a composite of numerous variations, not all of which are equally suited to a given situation".

To evaluate Apple’s corporate strategy using the three strategic tests, best fit, competitive advantage, and financial performance, we must understand the characteristics driving Apple’s corporate strategy. Apple’s strategy focuses on technological innovation, timeliness, brand recognition, and brand loyalty. The characteristics of Apple, as an organization, that supports this strategy are an internal culture of secrecy, forward thinking in terms of consumer needs and wants, and the capitalization of converging industries or market innovation.

By supplying an item which is differentiated from their rival’s product in such a way that the consumers are ready to pay at a quality price for the product. This is known as differentiation strategy.

This intensive strategy applies mainly in developing markets. Also, Apple implements market development strategy through novel products. For example, the company innovates and creates new goods like the Apple Watch, which is a new product line. Due to that, the company is now developing its research and development in the smartwatch market. This intensive growth strategy agrees with Apple’s generic strategy of broad differentiation by examine the company’s potential and abilities. Generic strategies such as this requires that unique products should be offered to different market segments, which the company reaches through market

A company 's relative position within its industry determines if their profitability is higher or lower than the industry average. The fundamental primary of above average profitability in the long run is the sustainable competitive advantage (Powers & Hahn, 2004), which is about how a Strategic Business Units (SBUs) makes esteem for its customers both more noteworthy than the cost of providing them and better than that of competitor SBUs (Johnson et al., 2014). According to theory of Porter (1980), there are three generic strategies for reaching above-average performance in an industry which are differentiation, cost leadership and focus. Cost leadership includes most minimal operational and least costs in the target

To compare or contrast any industry, our text’s author makes a clear distinction of the identification of the specific industry so the appropriate strategy can be identified. To ensure the strategy identification is not apples to oranges, he gives the example of McDonald’s utilizing Porter’s low cost strategy if it’s in relation to all restaurants and not just fast-food, but if the industry was fast food only with an organization like White Castle, McDonalds would be defined somewhere in the middle. Specific market industries are important in identifying the type of strategy an organization is utilizing and strategies are relative terms to the way in which the organization hopes to or actually fits into an industry. Porter’s generic typology emphasizes low cost industries or how industries strategies differentiate their products in the industry through specific focus groups or to the market as a whole. Porter’s typology is expressed in low-cost (cost leadership) strategy (without focus), where typical quality and research and development standards are set a there is very little opportunity to improve either because of the cost driver scenario. Wal-Mart is identified in our text as part of this group. Next is the focus low cost strategy, identified by low cost items with a specific niche. The text refers to Aldi, a low cost retailer known for a specialized selection of items management have deemed to be low cost, but specific to the community needs in which they

The "Generic Competitive Strategies" are: Cost Leadership Strategy, Differentiation Strategy, and Focus Strategy. This theory is based on two dimensions, which are how the firm seeks to acquire a competitive advantage and their intended market 's scope, which can either be broad or focused.

To begin with, skills and resources as well as organizational requirements of Apple 's differentiation comes from the organizations core skills which includes the ability to make easy-to-use software, integration with other platforms such as iTunes, creative talent/skilled labor, and a sleek simple design (Pearce & Robinson, 2011, p. 220). Another organization, Nike, has a differentiation strategy that resides in the company’s brand, its long tradition in the industry, its partnership with elite professional athletes, and a strong coordination of functions in the value chain from R&D to product development to advertising/marketing (Pearce & Robinson, 2011, p. 220).

Differentiation is a critical success factor for the industry due to its fiercely competitive nature. Companies spend huge amounts on advertising, sales promotion and publicity.

Business Strategies: This term is not to be confused with the overall strategic plan. It refers to the option the company has to either adopt a cost leadership position in its industry, or to differentiate( charge premium prices on its products and services based on unique product or marketing advantages). The Japanese auto manufacturers including Toyota, Honda and Nissan for long adopted cost leadership vis. a. vis their American and European competitors. The Swiss watch industry has always adopted a differentiation strategy for almost all of its products( the exception is Swatch which was deliberately priced low to attack the Japanese who had taken a huge market share by cost leadership) While a new entrant to an industry usually takes a cost leadership position to facilitate its entry, it will after a while consider and adopt a differentiation position for some of its products. This has been demonstrated