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Porter's Generic Strategies are a framework for businesses to gain a
competitive advantage in their respective markets. Introduced by
Michael Porter in 1980, the strategies are composed of three basic
strategies: Cost Leadership, Differentiation, and Focus 123.
1.Cost Leadership Strategy: This strategy focuses on
becoming the low-cost producer in the industry 5. The targets of
the strategy are price-conscious customers. It's an approach
where the company provides a quality product that is on par
with the competition for a lower price1. For instance, a
company may lower costs, yet retain prices, on popular
products4.
2.Differentiation Strategy: This strategy aims to distinguish a
company's products or services from that of competitors 2. The
goal is to be unique. A company may use creative advertising,
distinctive product features, higher quality, better
performance, exceptional service, or new technology to
achieve a product being perceived as unique 2. This strategy
can reduce rivalry with competitors if buyers are loyal to a
company’s brand2.
3.Focus Strategy: This strategy rests on the choice of a narrow
competitive scope within an industry5. The focuser selects a
segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others 5. The focus
strategy has two variants, cost focus and differentiation focus 5.
A company can use these strategies to achieve a competitive
advantage by following these steps6:
4.Ask key questions: Start by asking yourself questions to
gather the necessary information to inform your strategy 6.
5.Choose a strategy by performing a SWOT analysis:
Performing a SWOT analysis can help you determine the
position of a business in the marketplace relative to
competitors6.
6.Consider applicable industry forces: Understanding the
industry forces can help in applying the chosen strategy
effectively6.
7.Apply chosen strategy consistently: Once a strategy is
chosen, it should be applied consistently across the
organization6.
Remember, Porter indicated that every company or organization
should only pursue one of these strategies or risk wasting company
resources in a futile attempt to grow the business fast 1. These
strategies are powerful tools for businesses looking to gain a
competitive advantage in their respective markets78.
Source(s)
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1. Porter's Generic Strategy: Explained with Examples - GitMind
2. Porter's Generic Strategies EXPLAINED with EXAMPLES | B2U
3. Porter's generic strategies - Wikipedia
4. Porter's Generic Competitive Strategies (ways of competing)
5. Porter’s Competitive Generic Strategies: Types and Tips
6. A Guide to Porter's Generic Strategies (With Tips for Use)
7. Porter's Generic Strategies: An Overview of Competitive Advantage ...
8. Porter's Generic Competitive Strategies: Unleashing Business ... - Medium
