Porter's Generic Strategies

Edmundson (2013) explains that companies that consistently expand in a profitable manner have learned to take their strength and transform them into a competitive advantage. Edmundson (2013) list nine principals that will help companies turn their strengths into competitive advantages. The nine principals are to be quantifiable, stay objective and creditable, be true and accurate, not stated by you’re competition, contrast, use concrete facts and tangible data, emotional, focused and simple, and tell stories to make your audience relate. Edmundson (2013) continues that typically companies that have

Differentiation strategy is generally reserved for companies with a clear competitive advantage. Companies such as Mercedes and Apple employ this strategy. Differentiation strategy is demonstrated when a company provides value to customers through unique unique features and characteristics of a company's products rather than by the lowest price (Open Learning World 2010).

Step 1: The business strategy goals are to capitalize on specialty products and offer products for all incomes. The business strategy is a collaboration of the broad differentiation strategy and focused market niche strategy. The broad differentiation strategy concentrates on “seeking to differentiate the company 's product offering from rivals ' in ways that will appeal to a broad spectrum of buyers.” The focused market niche strategy principles are differentiation and concentrating on a narrow buyer segment that may outcompete rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals ' products” (Thompson, Gamble, & Strickland, 2006, p. 114).

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

A specialization strategy focuses on a narrow market segment or niche and pursuing either a differentiation or cost leadership strategy in that market segment according to Jean Phillip and Stanley Gully. To be successful, businesses following a specialization strategy are required to know their market segment very well, and often enjoy a high degree of customer loyalty. The company can be successful using this strategy if it results in either lower costs than competitors serving the same niche or an ability to offer customers something that other competitors cannot.

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

In differentiation strategies, the emphasis is on creating value through sustainable uniqueness. This can be achieved through product innovations, superior quality, or superior service, which is then sustained and leveraged through creative advertising; brand-building and strong supply chain relationships. Another requirement for a successful differentiation strategy is that customers must be willing to pay more for the uniqueness of a product or service than the firm paid to create it. A differentiation strategy will lead to higher firm performance only if buyers value the attributes that make a product or service unique enough to pay a higher price for it or if they choose to buy from that firm preferentially. If

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.

Similarly, both companies had a product differentiation strategy, with the aim of being distinctly set apart from their competitors by the viewing market. However, different elements of this strategy were focused on by the firms. For instance,

While playing the BSG I found the best strategy was the best-cost provider strategy. Using the best-cost strategy allowed me to continue using a decent amount of superior material while also offering prices that were below or around the same price as my competitors. My shoes where not the highest quality or most expensive, but it was also made with a small amount of superior material so it was also not the cheapest made shoe available. This strategy worked best because it attracted buyers who wanted a good quality shoe but did not want to pay high quality prices. Since there were so many companies offering the same product, offering a medium-quality product at a lower price helped my company to gain more customers and market share. A focused differentiation strategy worked least well. Concentrating on one niche results in a company missing out on potential customers. Competitors working outside of the niche will eventually find ways to match the firm’s capabilities in serving the target niche. If the wants and needs of the target market start to switch over time, entry into the focused market can become easier for competitors as people look for different products and services.

There are also some risks for each strategy. Upholding cost leadership can be risky because of the requirement of frequent capital investment to sustain cost advantage, then cost surges narrow price differentials and diminish ability to compete with other’s brand royalty. Differentiation strategy has some threats, such as imitation decreases alleged differentiation, buyers need for differentiation falls. Meanwhile, the risks for focus or niche strategy are the differences in preferred products or services between the strategic market and target as a whole narrows, the cost discrepancy between wide ranged competitors and the focused firms broadens to eradicate the cost advantages of allocating a narrow target or to offset the

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

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation and focus. Porter calls these bases as generic strategies.

The focused low cost strategy purposed to create a price advantage for the company. Usually, a company that use this kind of strategy more focus on a specific market niche, offering products to a narrow market segment instead of a broad one. The company then aims to be the cheapest supplier in the particular niche but not necessarily in the overall market.

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