Compliance and Choice Paradox

4304 WordsOct 9, 201018 Pages
Organisations face a variety of contradictory and competing approaches when deciding whether to comply with “industry norms”. With reference to empirical example, you are required to critically examine the strategic decisions to achieve (or not) industry leadership. INTRODUCTION Organisations face a variety of contradictory and competing approaches when deciding whether to comply with “industry norms”. De Wit and Meyer (2004)[i] refer to these scenarios as the “Paradox of Compliance and choice”. De Wit and Meyer (page 429, 2004) further state that where firms cannot influence the structure of their industry, compliance to the rules of the game is the strategic imperative. In such cases, the strategic demand is for managers to adapt…show more content…
Attainment of industry leadership in the next five years planning horizon would be difficult because of the high competition in the industry. Mercury was however intent on growing the business at a faster rate than the competition but still within the industry norms. As such, targeted their market share to grow from 3% in 2004 to 6% by 2008. Mercury Bank needed to decide which strategy to follow so as to achieve sustained growth. According to Michael Porter (1985), competitive advantage arises from the generic strategy which best fits the organisation’s competitive environment and then organising the value adding activities to support the chosen strategy. (Cited in Campbell et al, 1999, pages 134/5)[v]. M. Porter further stated that there are three main alternatives (cited in Campbell et al, 1999 page 134), these are: Differentiation - creating a customer perception that a product is superior to that of competitors’ products so that a premium price can be charged; Cost leadership - being the lowest cost producer of a product so that above average profits are earned even though the price charged is not above average; and Focus - utilising either a differentiation or cost leadership strategy in a narrow profile of market segment(s). Porter argues that an organisation must make two key decisions on its strategy; first, whether the strategy should be one of differentiation or cost leadership?, or whether
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