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ABM168 Lesson 4 Generic Competetive Strategies

The document outlines Michael Porter's three generic competitive strategies: Low Cost Leadership, Differentiation, and Focus, which companies can use to gain a competitive advantage. Each strategy is explained with examples, such as Wal-Mart for Low Cost Leadership and Rolex for Differentiation. The conclusion summarizes the key characteristics of these strategies in terms of market coverage and product offerings.

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Acmillah Cayamora
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35 views21 pages

ABM168 Lesson 4 Generic Competetive Strategies

The document outlines Michael Porter's three generic competitive strategies: Low Cost Leadership, Differentiation, and Focus, which companies can use to gain a competitive advantage. Each strategy is explained with examples, such as Wal-Mart for Low Cost Leadership and Rolex for Differentiation. The conclusion summarizes the key characteristics of these strategies in terms of market coverage and product offerings.

Uploaded by

Acmillah Cayamora
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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GENERIC COMPETITIVE

STRATEGIES
INTRODUCTION
➢ Professor Michael Porter suggested three
general positioning strategies to achieve competitive
advantage :
1. Low Cost Leadership Strategy
2. Differentiation Strategy
3. Focus Strategy
➢ The Generic Competitive Strategy (GCS) is a methodology
designed to provide companies with a strategic plan to
compete .The GCS is useful when a company is looking to
gain an advantage over a competitor
MICHAEL PORTER'S GENERIC
STRATEGIES
LOW COST LEADERSHIP
STRATEGY
• The firm employs economies of scale and
efficiencies in production line
• Here the firm tries to beat the competitors by
keeping the prices low
• It is characterised by reduction of over heads
and fixed costs of production
• This helps to avoid risk and able to sustain in
inflation
ACHIEVED THROUGH
• Appropriate Demand forecasting techniques
• Efficient resource utilisation
• Achieving economies of scale
• Outsourcing
• Complete capacity utilisation
• Use of improved technologies
EXAMPLE
• Wal-Mart is one of the most well-known
companies that use Cost Leadership as their
business strategy.
• With efficient distribution methods, huge
volume discounts from suppliers, and their
control of manufacturing and inventory
• By specializing in low costs, they got higher
number of customers who spend an average
amount of money in their stores
DIFFERENTIATION STRATEGY
• This strategy is adopted by the firm which
wants to differentiate its product from its
competitors
• Here the firm wants to highlight some feature
or benefit in its product offering as superior to
that of its competitors
• By heavy advertising it is able to insert this
value in the minds of its customers thereby
creating brand loyalty for its product
ACHIEVED THROUGH
• Through different pricing strategies
• Incorporating features and benefits in their
product or service
• Packaging
• By offering new products, services or offer
attractive promotions (innovation)
• Channel and distribution strategies
EXAMPLE
• BIG BAZAAR : Adopt a low price strategy to
attract its customers (pricing strategy)
SAMSUNG SMART CONVERTIBLE
REFRIGERATORS
As per the convenience of customers
freezer can be converted into fridge (product
differentiation)
PHILIPS AIR FRYER
Air-fried foods are healthier than
deep fried foods (innovation)
PEPSI & COCO-COLA
They cover all retail outlets in towns as
well as in villages
(channel differentiation)
FOCUS STRATEGY
• In this firm focuses on a particular segment or
market within an industry
• This segment maybe defined in terms of
products, geography or customers
• Focus are of two types
– Cost focus
Cost focus strategy implies a cost advantage in the
segment
– Differentiation focus
Differentiation focus focuses on a differentiated
offering in the market
ACHIEVED THROUGH
• Offering unique features that fulfill the
demands of a narrow market
• Develop Customer Intimacy
• Promotional and advertising activities based
on needs of target market
• Increasing production efficiency by making
investments in technology
EXAMPLE FOR COST FOCUS
• IKEA
Young furniture buyers who want style at low cost
(price sensitive)
SOUTHWEST AIRLINES
.They keep ticket prices low by lowering its
operating cost
.Point to point services for flying passengers
from mid-sized cities
EXAMPLE FOR
DIFFERENTIATION FOCUS
• ROLEX
– Serve highest end of wristwatch market (premium
pricing and image)
• ROLLS ROYCE
– Serving luxuries end of automobile market
(premium pricing and image)
CONCLUSION
COST LEADERSHIP DIFFERENTIATION COST FOCUS &
DIFFERENTIATION
FOCUS

Broad market coverage Broad market coverage Narrow market


coverage
Low price than Unique market Provide low cost and
competitors offerings unique products to a
small market segment

Bring down cost of Creating superior Customised products


production products
REFERENCE
• “Strategic Management Concepts” by Robert E Hoskisson and
Michael A Hitt
• “Strategic Marketing Management: planning, implementation
and control” by Colin Gilligan and Richard M S Wilson
• “Strategic Project Management (Strategic Success)” by Paul
Roberts

• Source: https://www.slideshare.net/slideshow/generic-
competitive-strategies-187136400/187136400

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