Porters Generic Strategies

Business Level Strategies for competitive

advantage

AALIYA ASHRAF
How to gain competitive advantage
Competitive advantage: Competitive advantage refers to factors
that allow a company to produce goods or services better or
more cheaply than its rivals. These factors allow the productive
entity to generate more sales or superior margins compared to
its market rivals.
2 key aspects/dimensions
 scope of market ( reach/customer base)
Broad market /narrow market
 Source of competitive advantage
differentiation
low cost
Cost leadership: becoming the lowest priced provider for a
broad customer base.
Can be achieved by:
• Efficient/lean production methods.
• Closer relationships with suppliers
• Investment in newer technologies.
 Sells the same products as others but at very cheap prices.
 Single marketplace for anything.
Differentiation: doing something different/unique with your
products that makes customers pay more.
Achieved by
 High quality
 Better brand value
 Wide distribution
• Brand value gives them a competitive advantage.
Cost focus: cost leadership in a narrow focused market.
Differentiation focus: differentiation strategy in a narrow
focused market.
Ducati : only for real motorcycle enthusiasts.
Costa Drive Thru: only for customers who want to have coffee
on move.
Integrating cost leadership
and differentiation :
 Producing low priced goods
with differentiated
features.
 Simultaneously focus on 2
things.
 Can be a high risk
strategy ????
 Sells unique products, has
its own designers, and also
sells at a lower price .
 Invests in efficient logistics
 Stuck in middle.
 BCG Growth share matrix
• Boston Consulting Group –provides consulting services to
various businesses.
• Devised a matrix that helps in carrying out portfolio analysis
( portfolio of products).
• Relative market share of a firm in an industry and the market
growth.
• RELATIVE MARKET SHARE??
• ( market share in comparison to the largest competitor in the
market)
Google BCG matrix
• SAMSUNG & NOKIA ( smart phone business).
• Strategies can be formulated depending on where the
product lies in the matrix.
Build ( question mark)
Hold ( star)
Harvest ( cash cow)
Divest ( dog)