most important: product differentiation/product cost. [pic] Porter (1980) stressed that failure to adopt single strategy of differentiation or low cost results in “stuck in the middle” scenario since adopting more than one strategy loses entire focus of organisation/results in lack of clear direction as differentiation incurs costs which contradict basis of low cost strategy whilst standardised‚ low cost products have no differentiation hence‚ cost leadership or differentiation strategies are mutually
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Generic Strategies 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. Cost leadership emphasizes producing standardized products at a very low per unit cost for consumers who are price sensitive. Differentiation is a strategy aimed at producing products and services considered unique industry wide and directed at customers who are relatively price insensitive
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depend on whether a company’s target market is narrow or broad‚ and whether a company is seeking competitive advantage through low-cost or product differentiation. These two factors reveal five generic competitive strategies. The five strategies are Overall Low-Cost Provider Strategy‚ Focused Low-Cost Strategy‚ Broad Differentiation Strategy‚ Focused Differentiation Strategy‚ and Best Cost Provider Strategy. H Company used Broad Differentiation Strategy‚ which Thompson‚ Peteraf‚ Gamble‚ and Strickland
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Competitive Scope ie in which markets will the company compete (products or geography) • Broad • Narrow (2) Competitive Advantage ie how will the company compete in its’ chosen market • Price • Non-Price Characteristics GENERIC CORPORATE STRATEGIES COMPETITIVE SCOPE COMPETITIVE ADVANTAGE Lower Cost Broad Target Narrow Target Cost Leadership Cost Focus Differentiation Differentiation Differentiation Focus PROBLEMS WITH PORTER’S APPROACH Criticisms of this approach to strategic choice can
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superior returns. A firm positions itself by leveraging its strengths. Michael Porter has argued that a firm ’s strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope‚ three generic strategies result: cost leadership‚ differentiation‚ and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry dependent. The following table illustrates
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competitive strategies and Porter’s five forces. In conclusion‚ consulting recommendation will be advised. Thompson describes a five strategy phases for crafting and executing on strategy as; low-cost provider‚ a broad differential‚ a focused or niche market based on low cost or differentiation‚ and best-cost provider. “A low-cost leader’s basis for competitive advantage is lower overall costs than competitors. Whereas‚ Siengal’s Successful low-cost leaders are exceptionally good at finding ways to
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APPENDIX 3: PAST EXAMINATION PAPER Note to Students: Providing a copy of this paper does not signify that future papers will follow the exact same format. SAMPLE EXAM (Worth 50% of final grade) Note: Final exam format may somewhat vary. This final exam will use multiple choice questions. You will be required to answer 100- 120 multiple choice questions in 3 hours and enter your answers using the Scantron sheet that had been provided to you. You
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advantage in terms of cost and uniqueness which had led to a cost advantage and differentiation advantage. Although cost advantage and differentiation advantage are mutually exclusive‚ Emirates Airlines was able to sustain both. As for the competitive scope‚ the company can have either a broad target or a narrow target. Most probably Emirates Airlines is favouring the broad target because it is using both differentiation and cost instead of focusing on one of the factors. On the other hand‚ a business
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The Company aims to become and remain the lowest – cost producer and distributor in the industry. (ii) The Broad Differentiation Strategy The Company strives to produce and distribute a product or service that is perceived as unique throughout the whole industry. (iii) The Best Cost Provider Strategy This strategy combines the low cost leadership and the broad differentiation strategies. The Company aims to give value for money products to consumers while enhancing quality and other
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each company’s strategic approach entails custom-designed actions to fit its own circumstances and industry environment. 4. The biggest and most important differences among competitive strategies boil down to: a. whether a company’s market target is broad or narrow or 369 370 Section 6 Instructor’s Manual for Essentials of Strategic Management b.
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