Porters Three Generic Strategies

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“Outline Porter’s three generic strategies and discuss whether generic strategies can lead to sustainable competitive advantage”

With many views and variations on strategy and a company’s ability to sustain competitive advantage, it seems to be generally acknowledged that Porter’s three generic strategies i.e. Low Cost, Differentiation and Focus strategies, are the most widely accepted. In my following essay I will outline these three generic strategies and discus whether or not generic strategies can lead to sustainable competitive advantage.
Cost-leadership strategy, or low cost strategy allows the firm to gain competitive advantage and market share by appealing to cost-conscious consumers. They can either use a no frills approach strategy which combines an inferior product with a low price, or a low-priced strategy where they would produce a product of similar quality but sell it at a lower price. (Johnson et. al, 2009). Pursuing low product cost alone however will not sustain competitive advantage. Managers must attempt to reduce costs in other areas of the firm, such as manufacturing and distribution in order to stay ahead of their competitors.
Differentiation strategies involve trying to incorporate unique features to your product or service that will allow consumers to differentiate you from your competitors. This type of strategy can be particularly useful in markets which are saturated or where consumers aren’t particularly price-sensitive. One example of a firm being able to differentiate themselves would be Apple, with their unique design and technical expertise. In order to sustain competitive advantage, firms must make their product/service difficult to imitate. Intangible assets such as a powerful Brand can be sources of differentiation that cannot be imitated and are useful for sustaining competitive advantage. (Johnson et. al, 2009).…...

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