Why Does Each of the Five Generic Competitive Strategies Require a Different Set of Product/Market/Distinctive Competency Choices?
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
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
References: 1) Thompson A.A and Strickland A.J. (1999) – Strategic Management, McGraw Hill 2) Smith A. and Malaba J. (2001) Strategic Management 1, MBA Module, ZOU, Harare