Michael Porter's Strategy Clock

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2 – Strategy Clock Analysis Introduction In many open markets, most goods and services can be purchased from any number of companies, and customers have a tremendous amount of choice. It's the job of companies in the market to find their competitive edge and meet customers' needs better than the next company. When there are only a finite number of unique products and services out there, how do different organizations sell basically the same things at different prices and with different degrees of success? This is a classic question that has been asked for generations of business professionals. In 1980, Michael Porter published his seminal book, "Competitive Strategy: Techniques for Analysing Industries and Competitors", where he reduced competition…show more content…
• Product differentiation. • Market segmentation. These generic strategies represent the three ways in which an organization could provide its customers with what they wanted at a better price, or more effectively than others. Essentially, Porter maintained that companies compete either on price (cost), on perceived value (differentiation), or by focusing on a very specific customer (market segmentation). Looking at Porter's strategies in a different way, in 1996, Cliff Bowman and David Faulkner developed Bowman's Strategy Clock. (7)This model of corporate strategy extends Porter's three strategic positions to eight, and explains the cost and perceived value combinations many firms use, as well as identifying the likelihood of success for each strategy. 2.1 Strategy Clock Analysis. When considering the following diagram and the strategies of Largo and its competitors, the first aspect to realise is that there is no single strategy that can be said they follow, but a combination of some. Largo could be said to follow the operations strategy through its modern factory and hence operating efficiencies. It has access to a skilled workforce whose experience benefits both quality control, and unit cost reduction. One of Largo’s main strategies is to differentiate itself by providing a high standard of service and product quality. Largo and its competitors are all strategically active in market, sales and quality/reputation to benefit their business. Therefore…show more content…
Porter Harvard University - Strategy Unit, 1980) Figure 4 Bowman’s Strategy Clock. Strategy 1 – Low Price and Low Added Value Strategy 1 is when a company provides the product with low price and low perceived value to the customer. There is no evidence that this strategy exists and indications are that it is not feasible long term in the industry. The first reason is that there are high costs in the industry and it is difficult for a company to survive by providing the product at a significantly lower cost to its competitors. Secondly, value to the customers is based on the quality of the product and the consistency by which it is supplied. Strategy 2 – Low Price Strategy 2 is when the company provides the product at a relatively low cost but manages to maintain its perceived value to the customers. This is an option that can be pursued by Largo because it has recently constructed a modern and highly efficient production factory and can therefore supply product of quality at lower prices than its competitors, and still achieve the same profit margins. Largo do not do this; the price of crisps generally corresponds between
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