Critical tactics for implementing Porters generic strategies

Obasi Akan, Richard S. Allen, Marilyn M. Helms and Samuel A. Spralls III

Obasi Haki Akan is an assistant professor of management at the University of Tennessee at Chattanooga. He earned his PhD from the Case Western Reserve University. He has published articles on the role of conversation in creating effective group and team performance. Rich Allen is the University of Chattanooga Foundation associate professor of management at the University of Tennessee at Chattanooga. He earned his PhD from the University of Pittsburgh. He has published numerous articles on the reward systems, motivation, and strategy. Marilyn Helms is the Sesquicentennial Endowed Chair and professor of management at Dalton State College. She holds a doctorate degree from the University of Memphis. She had published extensively on the topics of strategy, quality, and international management. Samuel Spralls is an assistant professor of marketing at the University of Tennessee at Chattanooga. He earned his PhD at Texas Tech University. His research interests include exploring ways that rms can realize the benets of virtual integration.

ince the early 1980s, Michael Porters strategic typology has been one of the most widely accepted methods of discussing, categorizing, and selecting company strategies. Porters novel idea that strategies can be classied into generic types (differentiation, cost leadership, focus or combination) has been the basis for much of the strategy research and practice in the past quarter century. Porter contends that by implementing one of these strategies, a company will have a competitive advantage and earn above average industry returns.

Many important gaps in our understanding of Porters typology still exist, hindering managers attempts to implement these generic strategies. One problem is that previous research has not identied tactics associated with each of the generic strategies. Furthermore, prior research has not determined which of these tactics are associated with higher levels of organizational performance. Thus managers lack insight on which specic tactics to implement at the operational level of their organization when following a chosen generic strategy. Mangers have essentially been left to interpret Porters theory and then determine implementation on their own. We have recently completed research to close this gap. In a forthcoming article (Allen and Helms, 2006) we report the results of our research study in a very technical format to the academic community. The research describes our study of over 200 organizations in which we identied a set of key tactics to describe each of Porters generic strategies. We also identify which tactics were signicantly related to higher levels of organizational performance. The purpose of the current article is to share our ndings with a more practitioner-oriented community and present the implications of our ndings to managers and decision makers in a less technical format. The major contribution of this article is that managers will gain the knowledge of how to better tailor their strategy implementation to more effectively implement whatever generic strategy they attempt to use. They will now be able to make tactical decisions based on the results of a scientic study rather than relying on their intuition, experience, or trial and error alone. We also present organizational examples to illustrate exemplary use of the key tactics to further enhance the practicing managers understanding of each of the key practices.

The research study

This section briey explains the research study, methodology and results. A survey containing twenty-ve common tactics that organizations use when implementing strategies was developed. Seven-point scales were designed so respondents could provide quantiable information on how extensively their organizations used each of these practices. Respondents were asked to estimate how frequently the various tactics are used by their organization. Table I shows eight samples of the tactical questions.

DOI 10.1108/02756660610640173

VOL. 27 NO. 1 2006, pp. 43-53, Q Emerald Group Publishing Limited, ISSN 0275-6668

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Table I Eight samples of the tactical questions

Never (0%) Vigorous pursuit of cost reductions Providing outstanding customer service Improving operational efciency Controlling the quality of products/services Intense supervision of front-line personnel Developing brand or company name identication Targeting a specic market niche or segment Providing specialty products/services 1 1 1 1 1 1 1 1 Almost never (1-20%) 2 2 2 2 2 2 2 2 Some times (21-40%) 3 3 3 3 3 3 3 3 About half (41-60%) 4 4 4 4 4 4 4 4 Most times (61-80%) 5 5 5 5 5 5 5 5 Almost always (81-99%) 6 6 6 6 6 6 6 6 Always (100%) 7 7 7 7 7 7 7 7

Participants were also asked to compare the overall performance of their organization to that of their competitors over the past three years, considering key performance measures such as growth in revenue, assets, net income, and market share. A pre-existing scale used extensively in prior research was selected for this purpose, allowing comparisons to be made between organizations representing a variety of industries. Respondents were asked to compare the performance of their organization to their competitors over the most recent three years and select a category that summarized their performance relative the competition in their industry. The scale that was used is shown in Table II. A total of 226 employees from a variety of organizations agreed to participate in the study by completing the survey. For inclusion in the study, it was determined a respondent must have at least six months employment at the organization to have adequate organizational knowledge to accurately complete the questionnaire. Post administration interviews with the respondents reinforced these criteria and respondents with a minimum of six months work experience reported no difculty in answering the survey questions. Five respondents were eliminated because they had less than six months prior work experience, resulting in a nal sample size of 221 with a 97 percent response rate. Respondents had an average of four years work experience, with the time employed ranging from six months to 27 years. The organizations included in the sample had a mean number of 1,467 employees with a range from three to 57,000 employees. A total of 62 percent were service organizations, 28 percent were manufacturing and 10 percent were in the government/non-prot sector. Of the organizations, 17 percent were unionized. After the data was collected, we used a popular statistical technique, a factor analysis, to analyze their responses. A factor analysis determines which items in a survey naturally group together into discernable factors. The factor analysis determined that the list of tactics naturally separated into four distinct groups. These groups appeared to conceptually represent each of Porters generic strategies (see Table III). The table summarizes the tactics which factored into each strategy. To determine if any of these tactics were signicantly related to organizational performance, we employed another commonly used statistical technique, a regression analysis, to check for statistically signicant relationships between variables. A regression equation for each of the four generic strategies, which included the representative tactics as independent Table II Categories of performance
Lowest 1-20% Total revenue growth (average over three years) Total asset growth (average over three years) Net income growth (average over three years) Market share growth (average over three years) Overall performance/success (average over three years) 1 1 1 1 1 Lower 21-40% 2 2 2 2 2 Middle 41-60% 3 3 3 3 3 Next 61-80% 4 4 4 4 4 Top 81-100% 5 5 5 5 5 Not applicable n/a n/a n/a n/a n/a

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Table III Generic strategies and their associated tactics

Differentiation strategy Extensive training of marketing personnel Cost leadership strategy Vigorous pursuit of cost reductions Focus/cost strategy Providing outstanding customer servicea Improving operational efciencya Focus/differentiation strategy Providing specialty products and servicesa Producing products or services for high price market segmentsa

Developing a broad range of new Tight control of overhead costs products or services Rening existing products or services Developing brand identication Innovation in marketing technology and methodsa Utilizing advertising Building a positive relationship within the industry for technological leadership Forecasting existing market growth Forecasting new market growth Fostering innovation and creativitya Building high market sharea Minimizing distribution costsa

Controlling the quality of products Dropping unprotable or servicesa customers Extensive training of front-line personnela Intensive supervision of front-line personnel Targeting a specic market

Note: a Tactics that were signicantly related to higher organizational performance

variables and overall organizational performance as the dependent variable, was computed. Organizations scoring above the mean for use of each generic strategy were included in the regression analysis for each respective strategy. As a result, ten tactics were identied as statistically signicant predictors of organizational performance. These ten tactics are denoted with an asterisk in Table III. These practices are considered keys to strategy implementation because they were signicantly associated with higher levels of overall organizational performance. This is not to imply that the other tactics are not important. With any strategy, it is important to implement an entire set of practices that help dene a unique strategy. The practices that we identied as critical were the ones that appeared to be the most signicantly related to organizational performance. They are the ones that differentiated the high performers from the average performers. As such, they should be carefully and thoughtfully focused on by organizations attempting to implement a specic strategy. In the following sections, we further discuss each of the four generic strategies and their respective key practices. Our original research was conducted with the understanding that individuals and their companies would not be identied, in order to increase the response rate to our survey. To aid the practicing manager in a fuller understanding of the critical tactics, we conducted further research to uncover examples from publicly available sources to illustrate the effective implementation of the signicant tactics. These illustrative examples are also presented in the following sections to bring these practices to life.

The generic strategies

Differentiation strategy When using a differentiation strategy, a company focuses effort on providing a unique product or service, setting their offerings apart from competitors. Product differentiation fullls a customer need and involves uniquely tailoring the product or service to the

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customer. This strategy allows organizations to charge a premium price to capture market share. The differentiation strategy is effectively implemented when the business provides unique or superior value to the customer through product quality, features, or after-sale support and service. Firms following a differentiation strategy can charge a higher price for their products based on the product characteristics, the delivery system, the quality of service, or the distribution channels. The quality may be real or perceived, based on fashion, brand name, or image. The differentiation strategy appeals to a sophisticated or knowledgeable consumer interested in a unique quality product or service and willing to pay a higher price for these non-standardized products. Customers value the differentiated products more than they value low costs. Our research identied three tactics which were signicantly related to organizational performance in the companies we surveyed following the differentiation strategy. These critical practices included: 1. innovation in marketing technology and methods; 2. fostering innovation and creativity; and 3. a focus on building high market share. Examples of organizations following these tactics are described below: Innovation in marketing technology and methods. Land Rover, Ltd., a differentiated, upscale SUV manufacturer, used its database marketing system to identify 4,000 Range Rover owners meeting a particular prole. Rover invited the selected owners to a special marketing event and sold 1,000 new Land Rovers priced on average, at $52,000 each. Rovers $150,000 investment in its database and mailing systems returned $52 million in sales (Knilans, 1997). Thus the innovation in marketing methods further supported and enhanced their differentiation strategy. Marketers are not only using more technology, they are using technology more effectively and efciently. A shift has occurred from using databases to simply sell more to creatively using databases to interact with customers and track the lifetime value of each customer relationship. Research agree it is eight to ten times more expensive to nd new customers than it is to market to existing ones. It is not a mystery that companies are increasingly using technology-enabling marketing practices to identify and interact with very precise target markets. Traditionally, technology has been used by marketers to gain processing efciencies, create databases, and perform various forms of customer analysis. In a recent survey by Forrester Research, 25 percent of their respondents were planning a marketing automation initiative. Of consumer services rms (e.g. nancial, retail, and travel services) surveyed 36 percent indicated they are planning a marketing technology initiative. As Elana Anderson, a Forrester analyst, explains:
. . . [t]he consumer services rms have already built their customer data warehouse, and after youve built that, and you get some analytics in place, you build some customer insight . . . Marketing automation is the next logical step, because it helps you do something with that insight (Bailor, 2005, p.16).

In another example, Pizza Hut, a differentiator that continually innovates with new products to keep customers interest, builds and managers customer relationships using their massive data warehouse. They gather data from point-of-sale customer transactions. From customer orders, Pizza Hut has competitive intelligence to predict trends and behavior and better manage targeted direct mail campaigns. The company claims to have the largest fast-food customer data warehouse in the world with almost 50 percent of the US market and some 40 million households included (Brown, 2003). Fostering innovation and creativity. Proctor & Gamble (P&G), the well-known manufacturer of branded consumer products, uses a tactic it describes as innovating the innovation process as a way to implement its differentiation strategy. Innovation is fundamentally different from incremental improvement. As John Pepper, former P&G CEO, puts it:

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 The differentiation strategy appeals to a sophisticated or knowledgeable consumer interested in a unique quality product or service and willing to pay a higher price for these non-standardized products.

. . . if we spend our time working on small modications to something, we wont have time to work on the big new stuff (Henkoff, 1996, p. 151).

In the early 1990s, P&G had lost its superior position in the market place because it had lost its ability to innovate. Tide had undergone 60 new and improved modications, Pampers was over 30 years old, and its Jiffy peanut butter had been around since the 1950s. Demand for these products was growing at only 2 percent annually, a rate typical of low-cost commodities but not for quality, branded or differentiated products. P&Gs rst reaction was to reduce costs and it managed to squeeze over $3 billion out of operating costs between 1992 and 1996. However, the company realized that what it needed was not more innovation but better innovation in their food, drugs, and beauty sectors. This was the vision for P&G. Second, the company began to practice empathic design of products and services, a customer insight technique requiring that rms not only observe customers but also live with them, and see what they are doing. Third, they engineered the customer experience (Henkoff, 1996). According to P&Gs chief technology ofcer, G. Gil Cloyd:
. . . what weve done is rene our thinking on how we conduct and evaluate research and development . . . we made some changes. For example, historically, we tended to put the evaluation emphasis on technical product performance, patents and other indicators of internal R&D efforts. Now, there is more emphasis on perceived customer value . . . Todays focus is on all aspects of the customer experience.

He describes this integration of commercial and technical innovation (much of which is increasingly coming from outside the rm) as holistic innovation (Teresko, 2004). Fourth, we build prototypes or models. P&G is using computational modeling and simulation to aid product design and testing. For example, the rm is using computational uid dynamics to better understand product performance. Clearly, P&Gs tactic of innovating is paying off. P&G met all their 2004 nancial projections. Sales were $51.4 billion, up 19 percent and prots were $6.5 billion, up 25 percent. A number of challenges confront rms wanting to innovate, beginning with a foresight component in the strategic planning processes. In other words, organizations need to develop a picture of the future. Most agree innovation and creativity are important to the long-term protability of a rm. Unfortunately, the processes involved in creating a context in which people value innovation (i.e. a culture where people are relatively open to new ideas) and creativity are not well understood. Making matters worse, some rms are out of touch with the environments in which they operate. This is particularly dangerous for the rm competing through differentiation with customer-focused innovative products. John Kao, CEO of the Idea Factory, a consulting organization, (Flower, 1999, p. 15) says a number of rms have come to him asking: How do we design an innovation engine and capability for ourselves? Kao recommends rms do four things to become more innovation-driven: 1. develop cross-functional teams; 2. explore factors outside the rms usual perspective (e.g. customer attitudes, new technologies, industry trends);

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3. balance creative and operational imperatives, i.e. design an innovation system that invests in the future without sacricing the present by developing ways to experiment, link organizational rewards to encouraging innovation and risk taking, nd and publicize success stories; and 4. create a context in which people value innovation and creativity. Building high market share. Developing and leveraging a diverse workforce can be an important tactic for building market share. Buying power data and differences in spending by race and/or ethnicity indicate that as the US consumer market becomes more diverse, advertising, product strategy, and new product development strategy must be customized to reach each market segment (Humphreys, 2004). The buying power of minorities, which includes Hispanics, African-Americans, Asians and Native Americans among others, is growing signicantly faster that the rest of the US population according to economic projections. Firms that generate, disseminate and use marketing intelligence to reach minorities are better able to build market share than those that do not (Slater and Narver, 1994). For example, Longo Toyota, of El Monte California, is leveraging a diverse workforce to build market share and create a sustained competitive advantage in automobile retailing for their Toyota cars and trucks. The staff speaks more than 30 languages and dialects, including Vietnamese and Punjabi (Woodyard, 2005). Longo is not simply being altruistic, as research indicates that minorities prefer to buy a car or truck from a person of the same race or ethnicity. In a survey prepared by CNW Marketing Research and USA TODAY, 46.2 percent of African-Americans, 37.7 percent of Hispanic, 19.1 percent of Southeast Asian, and 62.3 percent of Middle Eastern said they would prefer to buy from someone like them. Indeed, Hispanics and Asians together bought three million of the 16.7 million cars and trucks sold last year (Woodyard, 2005). Adopting this tactic has helped Longo sell 20,320 differentiated quality vehicles last year, an average of 56 cars and trucks a day. Wards 2004 list of top-selling automobile dealers ranks Longo as number one in sales. Other dealers are taking notice, as indicated by the 100 percent increase in the combined percentage of Hispanics and African-Americans employed (currently 15 percent) by dealerships between 1990 and 2004, (Woodyard, 2005). Relationship marketing theory can be used to explain these phenomena (Morgan and Hunt, 1994). One reason why workforce diversity leads to increased sales and prots is because buyers are better able to bond with salespeople that share their cultural values. Furthermore, trust is central to the development of long-term relationships and hence repeat sales (Morgan and Hunt, 1994). As Peter See, a two-time customer of Longo, puts it, [i]n the Philippines, you build your business based on trust, believing that his automobile salesman and fellow church member, Mel Castelo, is reliable, has integrity and is benevolent towards him (Woodyard, 2005). The key to using the tactic of leveraging a diverse workforce to build market share goes beyond simply hiring people of color. It also encompasses inviting minorities to do business with you as opposed to waiting until they simply discover you. High achieving rms, like Longo, use ethnic media to reach minorities. In a recent survey, New California Media found that 45 percent of Hispanics, African-Americans, Asian-Americans and other minorities prefer ethnic newspapers, television, and radio to mainstream media (USA TODAY, 2005). Cost leadership strategy Porters generic strategy of cost leadership focuses on gaining competitive advantage by having the lowest costs and cost structure in the industry. In order to achieve a low-cost advantage, an organization must have a low-cost leadership mindset, low-cost manufacturing with rapid distribution and replenishment, and a workforce committed to the low-cost strategy. The organization must be willing to discontinue any activities in which they do not have a cost advantage and may outsource activities to other organizations that have a cost advantage. There are many ways to achieve cost leadership such as mass production, mass distribution, economies of scale, technology, product design, input cost, capacity utilization of resources, and access to raw materials. Cost leaders work to have the

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lowest product or service unit costs and can withstand competition with their lower cost structure. Cost leaders may take a number of cost saving actions, including building efcient scale facilities, tightly controlling overhead and production costs, and monitoring costs to build their relatively standardized products that offer features acceptable to many customers at the lowest competitive price. But the tactic that proved to be most critical to this strategy is the minimization of distribution costs. Minimizing distribution costs. It is not surprising that minimizing distribution costs is an important tactic for developing a cost leadership position because channels of distribution are a major source of added-value for many rms. The use of replenishment logistics has proven to be a very effective method for minimizing distribution costs. This is evident in the retailing sector where a number of retailers have reduced distribution costs and at the same time improved customer service by adopting retail cross docking. Retail cross docking avoids putting products into warehouse or intermediate storage before sending it to retail stores or other outlets. Rather than allowing items to ll warehouses, goods move from the receiving dock directly to the shipping dock or are placed in a temporary staging area and then moved to the shipping dock. Although Wal-Mart, a large-scale low-cost leader, has generally been credited with pioneering the technique of cross docking in the early 1990s, the practice has since been adopted and rened by other retailers. Retail cross docking reduces distribution costs by eliminating redundant activities and avoids shifting costs between distributors and suppliers. Cross docking has been extensively used in retail because retailers often regularly order predictable quantities from a given set of vendors. Home Depot, another low-cost big box retailer, receives 85 percent of its inventory directly from vendors and has used retailer cross docking to signicantly reduce the number of less-than-truckload (LTL) shipments it receives and benet from large volume purchases (Canlen, 2001). In most instances, Home Depot has contracted the management of its transit facilities (distribution centers) to third party logistics providers. On average, each regional transit facility supplies 135 retail stores. Using retailer cross docking, each store pulls one daily shipment from its transit facility as opposed to having a stream of LTL trucks push goods throughout the day. The prior days sales data, obtained from the bar code scanned purchase system, determines the mix of products needed to replenish shelves. This tactic has allowed Home Depot to signicantly reduce its distribution costs and consolidate shipments to its stores.

Focus strategy In a focus generic strategy, a rm targets a specic, often narrow, segment of the market. The rm can choose to concentrate on a select customer group (youths or senior citizens, for example), product range, segment of a market (professional craftpersons versus do-it-yourselfers), geographical areas (East coast versus West coast), or service line. For example, many European rms focus solely on the European market. Focus also is based on adopting a narrow competitive scope within an industry that large rms may have overlooked. The focus strategy aims at growing market share through operating in a narrow market or niche segment more effectively than larger competitors. A successful focus strategy depends upon an industry segment large enough to have good growth potential but small enough not to be important to other major competitors. Focusing allows the rm to direct its resources to certain value chain activities to build its advantage.

. . . the processes involved in creating a context in which people value innovation (i.e. a culture where people are relatively open to new ideas) and creativity are not well understood.

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An organization may also choose a combination strategy by mixing one of the generic strategies of low-cost or differentiation with the focus strategy. For example, a rm may choose to have a focus differentiation strategy or a focus/cost leadership strategy. Based on our research, four tactics appear to be critical for organizations attempting a focus/low cost strategy: 1. providing outstanding customer service; 2. improving operational efciency; 3. controlling the quality of products or services; and 4. extensive training of front-line personnel. Examples of organizations doing an outstanding job of following these tactics follow. Focus/low cost Providing outstanding customer service. While customer service may not initially seem like a low cost tactic, like total quality control, providing quality service the rst time at the initial customer encounter, encourages standardization in procedures and reduces complaints and the time of managers and employees to solve problems. Performing services right saves time and costs from not having to do them over. In the hotel industry, Hampton Inn competes successfully by providing outstanding customer service as they concentrate on the value-conscious traveler market. The overriding idea at Hampton, part of the Hilton family, is Give (the customer) what I want, when I want it, where I want it. Hampton is 20 years old, still fresh and manages their 1,300 properties in a highly integrated and cohesiveness style. Typical customer services provided at all Hampton Inns include free high-speed Internet access, free breakfast, free local calls, a free in-room movie channel, and participation in Hiltons HHonorsw program, which allows customers to earn lodging and airline points for their Hampton stays. Hampton Inn is not only a brand, but a process and a philosophy. Founded in 1984 as a limited service arm of Holiday Inn (hence the focus part of the strategy), Hampton Inn was the rst in the lodging industry to offer a 100 percent customer satisfaction guarantee. The guarantee is built upon a system of customer relationship management that pervades the culture. Make It Hampton is a strategy that features three key cornerstones: Welcome, Breakfast, and Your Room and empowers staff to make it right for the customer, says Tom Keltner, Hilton hotel Corp.s president of franchise development. Basically, customers dont want their money back. If they have a problem, they want it xed. If youve got a team whos made aware of a problem and can x it, thats what the customer wants. Marshall calls the guarantee the brands original loyalty program. The payback is customer trust. Another good example of a low cost retailer that focuses on customer service is the Mens Wearhouse. This company, a discount retailer of mens suits, apparel, and accessories, anticipates and generates revenues of $1.71 billion. Their growth, up 10 percent over the 2004 levels, is due to their focus on mens clothing along with hands-on service to assist their customers in the selection of work and dressy casual clothing. Their suits typically sell for 20-30 percent less than comparable competitors. Thus price and convenience are their keys to success. Their staff is highly visible and there is even a tailor on the premises. Few department stores offer this level of service and almost none have tailors on site. Theyve taken service and selection and combined it under one roof for mens clothing (Grant, 2005). Improving operational efciency. Niche low-cost rms may improve their operational efciency by exible manufacturing systems, information networks, or total quality management systems. These systems can improve work ow, thus saving time and costs. The following example from the healthcare industry exhibits the potential cost savings available by improving operational efciency. Community Hospitals of Central California (CHCC) decreased their supply item costs by more than 19 percent in less than a year and a half (Barly, 1996). This facility concentrates on delivering cost-effective healthcare to their regional customers in California. To achieve these savings, CHCC took an unconventional

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 One reason why workforce diversity leads to increased sales and prots is because buyers are better able to bond with salespeople that share their cultural values.

approach by putting a pharmacy manager in charge of the hospitals resource distribution department. His team reduced supply costs by focusing on the process of buying, distributing, and using supplies. For example, CHCCs supply chain needed immediate attention and pharmacy operations were revised by using MedStations to decrease the cycle time of getting meds to the oor from two hours to 30 minutes. MedStations store and dispense medications in unit dose increments and are located at each nursing unit and can now be congured to interface with materials management and billing systems to track utilization, inventory and costs. Now the hospital knows what has been used for each patient and can more accurately determine medication costs per patient per procedure and have reduced costs by decreasing medication loss. Controlling the quality of products and services. Controlling the quality of products and services is a key practice for focus/low-cost providers. Controlling quality, for example, reduces wastes. Reducing wastes helps to control costs and save money. As an example E*Trade, the brokerage company focusing on low cost on-line stock trades, used the internet to compete against industry established brokerages like Merrill Lynch. E*Trade offered a higher quality of service and a broader product line. E*Trade initially experienced problems with system overloads from too many customer transactions. When the system crashed, customers were unable to sell or buy shares and E*Trade lost money. They developed a new software package to make it easier for customers to use the internet to make trades. Controlling the quality of their service, via investments in software has led to E*Trades growth (www.E*Trade.com, 1999). Extensive training of front-line personnel. One way to control product and service quality and provide efcient service and other operations is through training employees. Training should be focused on standardized procedures and the most effective and efcient delivery methods to save time and thus save costs. Southwest Airlines is a good example. The airline ranked as the most admired company in the industry in a recent Fortune (2005) magazine poll Where Companies Rank. Southwest Airline is the most successful low-fare, high frequency, point-to-point carrier in the USA, averaging nearly 3,000 ights per day with the help of 34,000 employees. Since 1987, Southwest Air has had the fewest customer complaints in the airline industry (Southwest Airlines Fact Sheet, Revised May 4, 2005, at www.southwestair.com). The company succeeds by capitalizing on human interactions. In addition to careful recruitment, employee training is streamlined since the airline uses only Boeing 737 aircraft. Employees are cross-trained so they can perform a number of tasks, thus decreasing the turnover time of planes at the gate. Southwest Airs University for People offers a full-spectrum of training and tracks employee training and development needs through specialized software from Pathlore, Inc. (www.pathlore.com). As another example of the value of extensive training of front-line personnel as a key tenet of a low-cost strategy, Coast Dental Services Inc. operates over 100 dental centers in Florida, Georgia, Tennessee, and Virginia which each follow a uniform operating model that emphasizes basic low-cost dental procedures. The centralized practice administration and management increases customer turnover by allowing dentists to focus only on patient care. Extensive training of some 180 dentists and hygienists is also done by Coast Dental at their centers (www.coastdental.com). Each service requires focused training and a Coast Dental corporate trainer has streamlined continuing education and training offering e-learning through their network. This reduces travel costs and training time. The support team also

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participates in Coasts progressive training and certication program and the company feels their paid company-wide training and free continuing education sets them apart from their competition (www.coastdental.com). Focus/differentiation Another combination focus strategy is a focus/differentiation strategy where the organization has a unique quality product offered to a targeted market segment or niche. The signicantly important, tactics include:
B B

producing specialty products and services; and producing products or services for high price market segments.

The following are some examples of how organizations have accomplished these tactics. Producing specialty products and services. Pier 1 competes more effectively in the retail market by focusing on providing unique specialty products and services (Triplett, 1994). Pier 1 was originally founded in 1962 as a direct importer of low-cost, low-quality kitchen products for the youth culture of the period. When Clark A. Johnson became CEO of Pier 1 Imports in 1985, there were 168 stores. Five years later Pier 1 was nearly four times larger, with Johnson as the driving force behind this explosive growth and market repositioning strategy. Johnson repositioned Pier 1 by assembling categories of merchandise imported directly from 42 countries to meet the needs of customers with household incomes of $50,000 and up, changing the company from a focus-low cost to a focus-differentiation strategy. Pier 1 became North Americas largest specialty retailer of decorative home furnishings, gifts, and related items. The company strategy was to import nearly 90 percent of what it sold. While other retailers sold a mix of domestic and imported items. Pier 1 is very specialized 50 percent of the business is furniture (25 percent wicker and rattan, 25 percent wood, glass, and metal furniture), 30 percent is decorative home furnishings, 10 percent clothing, and 10 percent miscellaneous. The strategy was to present Pier 1 stores as a place to discover. Nearly 40 percent of what Pier 1 sells each year is new and different from the previous year. Producing products or services for high price market segments. The Cadillac Division of General Motors is differentiating the brand to appeal to Chinas elite high-ying entrepreneurs, the only market segment that can afford Cadillacs hefty $63,000 price tag, with advertising that appeals to their pioneering spirit. Called Dare to be First, the campaign has two objectives, according to Shanghai-based Stuart Pierce, Shanghai GMs Cadillac brand director. First, we want to make sure we differentiate Cadillac from the top German brands like Mercedes and BMW. We want to position the brand as something different and very bold, [a car for Chinese] who want to make a statement and express self-condence, he said. The second objective is to present Cadillac as a top-tier luxury car. Although Cadillac has high awareness in China as a vehicle driven by presidents and movie stars, people dont know much about it (Madden, 2004). By focusing only on the limited market of the most afuent customers, Cadillac hopes to rapidly differentiate themselves as a quality product in a new but growing market segment.

Conclusion
Porters generic strategies are the widely accepted pool of options for any organization to pursue to achieve success and longevity. Participants in an industry may be successful following any of these generic strategies as long as they stick closely to the strategy and do not move toward a stuck in the middle position of trying to be all things to all customers (i.e. offering quality one-of-a-kind products at low costs). Porters strategies are a continuum with low cost at one end and differentiation at the other. Firms pursuing a narrow set of customers still must pick one end of the continuum in the focus strategy. Current strategy research, however, has offered little direction for managers charged with implementing these strategies. These ubiquitous strategies may seem self explanatory, yet further guidance is needed. Based on our study of more than two hundred organizations, a

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Keywords: Management strategy, Inuence, Product differentiation, Leadership

number of tactics are necessary to follow a given generic strategy. A handful of these tactics appear to be even more critical because they are linked to improved organizational performance. Thus this study has served to highlight and prioritize critical tactics for implementation. The examples provided in this article from familiar companies and industries serve to illustrate the implementation of these critical tactics. We hope that this article has helped to bridge the gap between strategic academic theory and practice.

References
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Further reading
Hofstede, G. (1980), Cultures Consequences: International Differences in Work-related Values, Sage, Beverly Hills/London.

Corresponding author
Richard S. Allen is the corresponding author and can be contacted at [email protected]

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