Ashima Negi is teaching live on Unacademy Plus
By:- Assistant Professor(Ms.)Ashima Negi Candidate For Doctorate (Ph.D.) UGC NET-Management. CA(I), MBA Finance, BBA, PGDM-Materials Management, NCFM, TOM & ISO 9000, QS g000 & Assurance, CCIBL
Strategic Management Porter's Generic Strategies
Porter's Generic Strategies -A firm positions itself by leveraging its strengths -Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus
Cost Leadership Strategy - This generic strategy calls for being the low cost producer in an industry for a given level of quality. The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share.
Risks Involved Other firms may be able to lower their costs as well. - As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage. Several firms following a focus strategy and targeting various narrow markets may be able to achieve an even lower cost within their segments and as a group gain significant market share.
- A leading cost strategy for McDonalds is the ability to purchase the land and buildings of its restaurants McDonalds also developed a strong division of labor for its production processes, tight management control and product development strategy. Creating a strong top-down style of management is another leading cost strategy for McDonalds Using fewer in-store managers allows the complete tasks.e lower-wage workers to
After nearing complete bankruptcy in the 1980s, Apple clawed its way back into the personal electronic industry through smart business practices and highly desirable consumer goods. -Apple uses low-cost direct materials to develop the cheapest consumer goods possible. Creating long-standing business agreements with companies like AT&T for web hosting and other applications helps Apple stay focused orn developing products rather than Internet hosting or access