Essay Example: Strategy Management


  • Generic Competitive Strategies
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Generic Competitive Strategies

In the modern business world, implementing generic strategies to gain a competitive advantage is the principal goal of every company. Typically, a business strategy mainly concerns two significant things, which includes deciding the primary objective of a business as well as how to accomplish these goals. A complete definition is however based on the competitive advantage that substantially develops from the value a corporate can generate for its buyers that is more compared to the company’s cost of creating it (Porter, 2008). The term value is used to refer to what the consumers are willing to pay for the services or products offered whereas a greater value arises from providing lower prices than the competitors but for similar benefits. Therefore, competitive strategies entail incorporating either offensive or defensive actions with the aim of forming a defendable position within the industry (McGraw-Hill 2016). The generic strategies can effectively assist an organization to deal with the five major forces in the market and be successful in comparison to the other companies. According to Michael Porter’s generic strategies, there are three effective ways through which a business can attain sustainable competitive advantage, which includes focus, differentiation and cost leadership strategies (Porter, 2008). In this essay, the best-cost provider and focused differentiation generic competitive strategies will be discussed, and their successes and failures exemplified.

Best-Cost Provider Strategy

The primary aim of this strategy is to offer customers more value for their money by ensuring that the products offered by business have the best or lowest costs and prices and have comparable attributes compared to the rivals. Thus, this strategy primarily emphasizes low cost along with differentiation (Pulaj, Kume & Cipi, 2015). The central concept of this strategy is to allow a company to offer quality end products at a relatively low price than its competitors and give a value proposition that surpasses their customers’ expectations (Porter, 2008). The competitive advantage associated with the best-cost provider strategy is to even out the service expectations of the competitors at a lower price. A significant risk of this strategy could be that an organization is often pressurized by its rivals who offer low-cost products and also sell high end differentiated products. An excellent example of a product that uses the best-cost strategy is Toyota Lexus. Many customers regard the Lexus as a luxury vehicle, and while purchasing the car, they consider the model of the vehicle to be very attractive or rather as a differentiated product for them. However, Toyota Lexus is in the midrange of prices for a variety of cars, but because there are unique features and price ceiling offered by Lexus, they help it to differentiate from other car models.

Focused Differentiation Strategy

The focused differentiation strategy entails creating differentiated products for various distinct segments. Typically, several products each differently promoted and branded allows a corporation to desensitize prices and as a result of different and unique brands the company can offer the products at a premium or higher rates (Porter, 2008). This strategy is mainly adopted by firms that wish to be successful and unique within the industry together with various dimensions of its products that are enormously valued by consumers. Using the focused differentiation strategy, a company attempts to make its product stand out to be extra from the products of the same category (McGraw-Hill 2016). However, according to Michael Porters is that companies using the focused differentiation strategy may end up incurring more cost especially via the different differentiation factors used for instance logos and advertisements that are applied to promote the brand image for the product (Pulaj, Kume & Cipi, 2015). In spite of the many advantages associated with this strategy, a significant risk connected with it is that it is hard to ascertain if the extra cost used in differentiation will fully be recovered by delivering the products at a premium price. A prime example of this strategy is the Coca-Cola Company, which uses an exceptional blend of advertisement as well as a logo that significantly assists it to stand out among the various soft drinks companies. One specific strategy used by the company is the freestyle machine whereby the customers can choose and add different flavors to their drink. Furthermore, a successful differentiation strategy can attract a rival firm to the company’s market segment.

In conclusion, Porter’s generic strategies have played a substantial role in helping the majority of businesses in achieving competitive advantage. These strategies provide a useful starting point in examining the concepts of focused differentiation and best cost provider that may help with strategic routes in fast-growing markets.

Works Cited:

McGraw-Hill (2016). Corporate Strategy: Diversification and Multibusiness Company (20th ed). Chapter 8

Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. simon and schuster.

Pulaj, E., Kume, V., & Cipi, A. (2015). The impact of generic competitive strategies on organizational performance. The evidence from Albanian contextEuropean Scientific Journal, ESJ11(28).