Q. 2.a. what is meant by generic competitive strategy? Discuss each of the generic strategy.

What is a Generic Competitive Strategy?

According to Porter, there are two ways that a company can gain a competitive
advantage; cost advantage or differentiation. A company is either working in a
broad or narrow range within the core focus of cost advantage or differentiation.
Let’s take a look at each strategy:

 Cost Leadership – A cost leadership strategy is applied when a company

is able to be a-low cost performer. Things like low overhead, lower rates
from venders than what your competitors receive, and lower costs on raw
materials. Keeping costs lower than your competitors and charging the
same rates as your competitors will give a distinct competitive cost
advantage. To maximize a cost leadership position a company can
underbid its competitor while still maintaining a healthy profit. A few
examples of companies that use the Cost Leadership model are Ikea, Jet
Blue, and Walmart.

 Differentiation – In this model a company seeks to be unique as well as

valuable to its customers. Often times a company will offer features or
services that are not offered by the competition. A company will also go out
of its way to be perceived as valuable or like a precious commodity. The
uniqueness that a company offers has to be something that its customers
are willing to pay a premium price for in order to be successful. Some
examples of companies that use differentiation are Apple, BMW, and
Tiffany’s.

 Focus – The Focus strategy is best applied when a company is working in

a niche market or has a niche that is within the overall organization. Niche
markets tend to be smaller and therefore provide the opportunity to
develop loyal customers. Within the Focus Strategy, there is the option to
focus on either cost leadership or differentiation by adding value to their
product and offering it to a select group. Examples of companies using the
focus strategy would be Empatica, TOMS and Veggie Grill. 

All of the strategies can be broken down into being either broad or narrow in their
scope. Cost Leadership and Differentiation are broad, as they appeal to a broad
customer base. As examples, Apple and Walmart both appeal to the entire
population just in different ways. Whereas a company like Veggie Grill is
appealing to a more narrow group of vegetarians and vegans.
Q. why overall cost leadership strategy is succeeded? discuss