Porters Generic Strategies

Question 1

Define porters generic strategies?

Answer 1

These are called generic strategies as it can be considered for all industries and different sizes of organizations.

1. Cost leadership
2. Differentiation
3. Focus
   
   3. 1 Differentiation Focus
   4. 2 Cost Focus

Question 2

Whats cost leadership about?

Answer 2

It’s increasing profits simply by minimizing cost and offering industry average prices.
Increasing market share by reducing prices. But, still making profits as costs are lower. Price is however not THAT relevant to cost leadership.

Question 3

How to achieve cost leadership?

Answer 3

1. Investing capital into technology to bring costs down.
2. Very efficient Logistics.
3. Low cost base - Materials, Labor, Etc.

Question 4

What is Differentiation strategy about?

Answer 4

Simply making the product different or more appealing or attractive to the customer.

• Brand image plays a huge role.

Question 5

How do we achieve cost differentiation?

Answer 5

1. Investing in research and development.
2. High quality products.
3. Effective sales and marketing.

Question 6

What is the focus strategy about?

Answer 6

It is about concentrating on particular niche markets and providing uniquely lower cost or well specified products.

It can be :

1. Cost focus
2. Focus differentiation

It is not about focusing because your organization is too small to focus on an entire market. You must ensure you are adding something extra as a RESULT for serving to that specific niche market.

Question 7

How can we achieve focus strategy?

Answer 7

1. Reducing costs through specialist suppliers for cost focus.
2. Special understanding of customer needs for differentiation focus.