The Generic+Strategy+Trap

2777 Words Oct 12th, 2012 12 Pages
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The Generic Strategy Trap
Danny Miller

Management experts claim that for a company to thrive, it mus concentrate on a single generic strategy—on one thing it does better th its rivals. But specialization also has its disadvantages. The author sugge that a broader, mixed approach may be preferable.

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ince the publication of Michael
Porter 's Competitive Strategy, many experts on strategy have been extolling the virtues of pure generic strategies. Porter argued that by adeptly pursuing cost leadership, differentiation, or focus strategies, businesses can attain significant and enduring competitive advantages over their rivals.
Cost leaders manufacture products at costs consistently below those of the
competition,
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It is often simpler to pursue strategies of either low cost or high quality while ignoring everything else, both for a firm and its competitors.
Companies that follow such pure strate­ gies may be at a disadvantage compared to those that combine them in a creative way. For example, unless there are signifi­ cant scale advantages or formidable en­ try barriers, rivals can trim costs to the bone while honing production processes to achieve maximum efficiency. But it is usually much harder to shave costs while maintaining flexibility, quality, or the attractiveness of the package. The most successful strategies—the ones hardest for rivals to neutralize through imitation—are those that harness many organizational skills simultaneously: in marketing, production, design, distribu­

tion, and procurement. In short, the magic of competing successfully usually comes from a complex, orchestrated recipe, not one that is easily duplicated.
Markets change. Customer needs and tastes evolve, and competitors invent new challenges. But firms that excel at only one thing (e.g., producing at low cost or attaining excellent quality) are especially vulnerable to such changes.
For example, pure cost leaders usually find it especially difficult to change technologies. Texas Instruments, Inc., was a formidable cost leader in com­
puter
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