Porter’s generic strategy
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This document discusses Porter's generic strategies, including cost leadership, differentiation, and market segmentation. It defines each strategy and provides examples. Cost leadership involves having the lowest costs or acceptable prices to target a broad market. Differentiation focuses on standing out from competitors through branding, packaging, or other attributes. Market segmentation, also called focus strategy, targets specific niche markets to build expertise and charge premium prices. The document warns that failing to choose cost leadership or differentiation can result in being "stuck in the middle" without a competitive advantage.
Porter’s generic strategy
- 2. Porter thesis is straightforward: To compete successfully the strategist needs to select a generic strategy and pursue it consistently This can be done, porter suggests, by taking into account a variety of factors, the five most significant of which are: •The bargaining power of suppliers •The bargaining power of customers •The threat of new entrants to the industry •The threat of substitutes product or services •The rivalry among current competitors
- 4. COST LEADERSHIP • An integrated set of actions designed to produce or deliver goods and service either at lowest cost or features that are acceptable by consumers. • Aiming to become lowest cost producer. • Targets a broad market. • Competitive advantage is gained by driving down cost. • The firm can compete with every other industry and earn higher unit profit.
- 5. Examples for Cost Leadership is : •Tata steel. •Dell computers. •Wall mart. •IKEA. •Micromax. •Coca cola
- 7. DIFFERENTIATION • Helps to understand “STAND OUT FROM THE CROWD” • Also called broad scope strategy. • Few ways to succeed while using differentiated strategy. • Differentiation can be achieved by means of the brand image and packaging.
- 8. Examples for differentiation : • McDonald's • Kamath hotels (India) limited. • Emami fair and handsome. • Dominos pizza – 30 minute home delivery. • Nokia. • Samsung. • Nike. • Lactose.
- 10. MARKET SEGMENTATION • Also known as Niche Market. •Helps in implementing premium price. • By this firm is able to build a grater in dept knowledge of each of the segment.
- 11. Examples for Focus Strategy : • PEPSICO. • Pedigree. • Ferrari. • Taj hotels. • RR- Rolls Royce. • Vertu.
- 13. Are you stuck in the middle???! •A company’s failure to make a choice between cost leadership & differentiation essentially implies that the company is stuck in the middle. • There is no competitive advantage for a company that is stuck in the middle and the result is often poor financial performance.
- 14. Companies like Toyota and Benetton were exception to this fourth concept and they were successful.