Generic Competitive Strategies Model

Generic Competitive Strategies

Can a firm adopt cost leadership and differentiation strategies simultaneously? Research by Greg Dess, Peter Davis and Rod White, suggests this is possible. Examples can be found of businesses which have been able to jointly follow overall low cost and high quality differentiation strategy.

Porter's Five Forces Model

Buyer's Bargaining Power is high since:

Buyers have many restaurant choices Buyer switching costs are low Threat of backward integration is high Buyer is price sensitive Product is undifferentiated Substitutes are available

Supplier's Bargaining Power is low since:

There are many supplying sources Switching costs are low Threat of forward integration is low Buyer is price sensitive Purchase large volumes of standardized products

Threat of New Entry is Medium since:

Profitability requires economies of scale Brand names are well-known Location is an issue Consumer switching costs are low Proprietary technology is not an issue Government policy is not an issue

Threat of Substitutes is medium-high since:

Consumer switching costs are low Substitute product is cheaper than industry product

Intensity of Rivalry is high since:

Competitors are numerous Industry growth is slow Fixed costs are high Brand loyalty is insignificant Consumer switching costs are low Exit barriers are high

Porter's Value Chain

The Value System

Critical Success Factors Analysis

Business Control Model