Porter Argues That If a Firm Is to Attain Competitive Advantage; It Must Choose Between the Types of Competitive Advantage It Seeks, Discuss Using an Industrial Example?

A cost leadership strategy focuses primarily on “producing products and/or services that are the lowest in the industry” (Turban, Rainer, & Potter, 2003). This type of organization forms business alliances that support their inventory management through computers and computerized purchasing. A differentiation strategy focuses on being unique within the industry and provides high-quality products at a competitive price (Turban, Rainer, & Potter, 2003). These types of companies “provide their customers with a

Porters Generic Competitive Strategies: The relative position of a company within its industry concludes whether the profitability of the firm is above or below the industry’s average. The above average profitability of the firm is fundamentally showing the sustainable competitive advantage in its long run. According to Michael Porter, competitive advantages originate from the value of a firm and there are two types of competitive advantages, which a company can own. These are low cost or differentiation. For any company, in

1. What is competitive advantage, and how does it relate to a company’s business model?

What is a competitive advantage for the company? How can the management use it? Make SWOT analysis for the company.

The organizations that endeavour to wind up the least cost makers in an industry can be alluded to as those taking after a low cost procedure. The organization with the least expenses would gain the most elevated benefits in the occasion when the contending items are basically undifferentiated, and offering at a standard business market cost. Organizations taking after this methodology place accentuation on cost diminishment in each action in the value chain. Note that an organization may be a cost pioneer however that does not inexorably infer that the organization 's items would have a low cost. In specific occurrences, the organization can for occasion charge a normal cost while applying the low cost leadership strategy and put the earnings made back into the business

Porter however believes that it is important to go beyond the traditional factors of production in that the most important factors were not inherited but were created from within. For competitive advantage to be successful a company must focus and specialise in an industry’s particular needs. Once this is achieved it must continue to work tirelessly to upgrade these needs. We learn from the article that through upgrading and innovations that factors which may at first seem to be a disadvantage can be converted into an advantage. An Example of this was shown to us with the steel producers in Brescia Italy. Disadvantages included: locations in Northern Lombardy meant high logistic costs and with inadequate transport system proved costly as well as high energy cost, high capital costs and no local raw materials. They established technologically advanced minimills that required small investment, use less energy and permit producers to locate to sources of scrap and end-use customers. As a result factors that were a disadvantage were converted into a competitive

A successful cost leadership strategy usually provides the entire firm with high efficiency, low overhead, limited perks, intolerance of waste, intensive screening of budget requests, and wide span of control efforts. However, some risks of pursuing this strategy are that competitors might imitate the strategy, thus, driving overall industry profits down; that technology breakthroughs in the industry may make the strategy ineffective; or that buyer’s interest may swing to other differentiating features besides price.

The manner in which firms are able to compete is most commonly categorized by implementing Michael Porter’s strategic typologies. Porter’s strategic theory has been the most widely accepted strategic approach used by fellow academics (Kim and Lim 1988; Bordean et al 2010). Porter proposed three generic strategies namely: cost leadership, differentiation and focus strategy. Warszawski (1996) later introduced a competitive strategy

Porter’s generic strategies describe how a company attains competitive advantage across its chosen market scope. There are three generic strategies-cost leadership, differentiation and

There are two schools of thought pertaining to how firms should choose the competitive strategy that best suits them. One is of the opinion that firms should choose one of the generic strategies and commit all resources to making it work. Porter belongs to this category. They believe that the value chain necessary for cost leadership is quite different from that of differentiation strategy and that while differentiation deals with better quality, cost leadership deals with lowering costs wherever possible.(DESS and DAVIES 1984) What porter articulated here is that there is need for strategic clarity.

There are two different types of competitive advantage: low cost and differentiation. We will develop them in this part I.

Once a company is capable of producing goods at lower costs than the market price within the industry, the company earns profits and it has a competitive advantage. This advantage gives a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. A company can also achieve a competitive advantage if their core competence is

According to Porter (1985) a company can apply three generic types of strategies to protect itself while competitive force is a key issue of the management. To achieve this position a strategy based on competency must be accomplished

Competitive strategy is the moves and methods that the firm has taken and is taking to appeal buyers, improve its market position, and to endure competitive pressures. The strategy is about what a firm’s capability to try to knock off competitors and attain competitive advantage, which can be offensive or defensive. There are three approaches to competitive strategy, which are low-cost leadership strategy where struggling to be the overall low-cost manufacturer in the in industry. Moreover, pursuing to distinguish one’s product offering from competitors (differentiation strategy), and the last one is focus or niche strategy where aiming on thin portion of the market rather than the whole market (Porter, 1998).

Competitive advantage is viewed as a explanation of a firm success and long-term survival. With knowing the firm and competitiors, competitive advantage can be established by delivering more value to the customers in a more efficient manner (Day and Wensley 1988; Porter 1985). However, to a competitive advantage, the firm should focusing on the customers needs instead of their internal operations (Czepiel 1992; Zeithaml 1988).