The Key Options Of Porter 's Generic Strategies

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This essay emphasis on the three key options of Porter 's generic strategies. Cost leadership, differentiation, and focus are the three generic strategies that will be deliberated on, and in addition the benefits and difficulties that come along with each strategic method. Michael E. Porter is a person of importance in regards to the competitiveness and economic development of nations and on competitive strategy. According to the Harvard Business School, “Michael Porter is the founder of the modern strategy field and one of the world’s most influential thinkers on management and competitiveness” (, 2015). He argued that in order for companies to achieve a beneficial position within or outside a market, in addition as outshine …show more content…

"A firm positions itself by leveraging its strengths" (Carnall, 2007, p. 120) and Professor Porter claimed that a company’s strengths are defined into one of two competitive environment aspects: competitive advantage and competitive scope. Thereby the strengths can be categories in either a narrow or a broad scope, which will result in three generic strategies. Porter termed the strategies, ‘cost leadership’, ‘differentiation’, and ‘focus’. The cost leadership strategy is a strategy that enables companies to become the lowest cost manufacturers in a market and allow them to obtain competitive advantage by getting its costs of distribution or production lower than its competitors in its market. To capitalize on this strategy successfully a company has to be the cost leader rather than trying to reach the position. There are several ways of achieving these low costs such as efficient production, tight control of overhead and costs, reduction of input costs, and by having a unique source of low supplies. For instance, if the competitors’ are selling their products at a standard market price and their goods were identical, the company with the lowest cost would earn the highest profit. However, this does not necessarily mean that just because a company is a cost leader the prices for their product would be low. In various cases, the company could

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