Why Does Each of the Five Generic Competitive Strategies Require a Different Set of Product/Market/Distinctive Competency Choices?

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STRATEGIC MANAGEMENT 1

Question

Why does each of the five generic competitive strategies require a different set of product/market/distinctive competency choices? Give examples of pairs of companies in Zimbabwe’s computer industry and food industry that pursue different competitive strategies.

Answer

The five generic competitive strategies have become some of the most used competitive strategies in contemporary corporate management. Michael E. Porter (1980) described competitive strategy as“… being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value”.

This presentation seeks to examine why each of the five generic competitive strategies require a different set of product, market or distinctive competency choices. Case studies of companies in the computer industry and food industry which pursue different competitive strategies are also given.

The five generic competitive strategies are listed and briefly explained below. (i)Low Cost Leadership Strategy
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 desirables on the products. (iv)The Focused or Market niche Strategy Based on Lower Cost The Company identifies a narrow buyer segment (niche) and strives to satisfy this segment through lower costs than what rivals will be offering. (v)The Focused or Market niche Strategy Based on Differentiation This strategy aims at creating a niche market for the Company which will be served with a unique, differentiated product which is far much better than what rivals are offering.

Each of the above generic competitive strategies are used under different circumstances. The different circumstances relate to the product and market conditions. The table below shows the difference on each of the generic competitive strategies in relation to the product and market.

Distinctive features of the Generic Competitive Strategies

| | Generic Competitive Strategy | |Distinctive feature|Low – cost leadership |Broad Differentiation |Best Cost Provider |Focused low cost + focused | | | | | |differentiation | |Strategic target |A broad cross section of the |A broad cross-section of the market|Value conscious buyers |A narrow market niche where buyer | | |market | | |needs and preference are | | | | | |distinctively different from the | | | | | |rest of the market | | | | | | | | | | | | | | | | |...
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