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Essay Porter’s competitive strategies
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Essay Porter’s competitive strategies
Slide 1: the use of Porter’s competitive strategies
Hello, I am Mesi Usiade, and in this presentation, I plan to analyze the use of Porter’s competitive strategy by four companies namely; Wal-Mart, Best Buy, Marriott Hotels, and Porsche
Slide 2: Introduction and Overview
The existence and survival of a company in any industry are dependent on its ability to withstand competition in a given niche. The relative position of a firm within a given industry determines its profitability; sustainable competitive advantage forms the fundamental basis for a firm’s profitability. Porter’s generic strategies offer a useful framework for organizations to identify a potential niche in which they can gain a competitive advantage through the development of high-quality goods and services. Strategies that a firm can use to gain competitive advantage include cost leadership, differentiation, and focus, which are instrumental in ensuring market dominance and profitability (Omsa, Abdullah, & Jamali, 2017). This presentation provides an analysis of four companies on how porter’s strategies have been used to gain a competitive advantage.
Slide 3: Wal-Mart
Michel E porter’s model illustrates that a company utilizes a generic competitive strategy as a general approach to effectively compete against other firms in the industry. An organization can gain competitive advantage by appealing to cost-conscious customers, or by selling products below the market average. Common traits by companies implementing the cost leadership approach are access to technology that is used to drive costs down and improve efficiency and productivity. In this case, Wal-Mart’s generic strategy is cost leadership. Wal-Mart is a low-cost producer of retail services and related outputs; this is achieved through the use of technologies and automation of its processes (Ferguson, 2018). Through the use of Wal-Mart’s information, decision, and intelligence system, the business can lower the cost of operations. Besides, the company is also involved in low-cost differentiation by focusing on low prices as the selling point. In this way, Wal-Mart’s products are highly differentiated from those of the competitors hence gaining a competitive advantage. Wal-Mart’s cost leadership strategy also involves a low level of marketing segment, service, and products are offered to all consumers in the preferred target market. Thus, a cost leadership strategy enables Wal-Mart to gain a competitive advantage.
Slide 4: Best Buy
The fact that all business entities meet stiff competition, there is a need for every organization to adopt the best strategies that will provide a competitive edge. Porter’s competitive scope, in particular, differentiation, offers a mean for organizations to gain a competitive advantage. In a differentiation strategy, a firm seeks to be unique in its industry alongside another dimension that is widely valued by customers. One of these valuable attributes is selected, and the organization uniquely positions itself to meet those needs. In this regard, Best buy competitive advantage is customer-centered. In essence, Best Buy has extremely modified and personified services to clients (Trainer, 2018). Once an organization understands the needs, wants, and aspirations of the target market, there are minimal barriers that will prevent the organization form taking corrective actions to attain satisfaction. Also, an organization that focuses on customers tends to have higher chances of securing competitive advantages, which result in higher revenues and customer conversion rates. Best Buy well masters this concept; through automation of services, customer needs can be addressed adequately and on time.
Slide 5: Marriott Hotels
Focused differentiation is part of the porter’s generic strategies for gaining competitive advantage. A focused differentiation strategy often requires the offering of unique services and products that fulfill the needs, wants, and aspirations of a narrow market. Narrow markets tend to be defined in different ways, depending on settings. Firms implement the focused differentiation strategy to concentrate their efforts on a particular sales channel, for instance, selling through brick and mortar physical locations while others target specific demographic groups (Gorondutse &Hilman, 2017). Firms implementing the differentiation strategy offer unique features that appeal to a variety of customers, while at the same time pursuing to satisfy individual needs. Marriott Hotels is an example of a business entity that has gained its competitive advantage through the use of the competitive differentiation strategy. The company focuses on a narrow consumer segment; in this case, couples without children (Gupta, 2018). Through the tropical resorts, unique services characterized by minimal disruption from children are a guarantee, unlike other resort service providers. By employing this strategy, the company is uniquely positioned in the market and can withstand completion.
Slide 6: Porsche
Part of porter’s generic strategies is the cost focus strategy. As part of the two focus strategies, a cost focus strategy entails competing based on price to target a narrow market. Firms that employ this strategy do not necessarily charge the lowest prices for their products and services but rather charges prices relative to the competitors within the target market. Focus strategy tends to be useful if the company knows its consumer segment and products or services that can fulfill the needs and wasn’t of the consumers. In this regard, the cost focus strategy exploits the differences in cost behavior in some segments. The suitability of cost focus strategy is based on the fact that it enables a business to build strong relationships with the target market resulting in stronger rand affinity and loyalty. Porches is an excellent example of the focus strategy that has been effectively implemented to gain a competitive advantage. Porsche adopts the focus strategy both in terms of low cost and offering the best services (Chibber, 2018). This is made possible by serving the needs of a niche market at the lowest reasonable price by emphasizing the taste, size, and design of the products that match the customer’s needs and requirements.
Slide 7: Usefulness of the Porters strategy
Given the importance of competition, Porter’s strategy offers a framework in which firms can outperform competitors if they pursue the recommended generic competitive strategy. Porter’s model is thus useful in analyzing the selected companies; it provides insight concerning individual companies’ strength that firms have utilized to position themselves against the pressure of the main competitive forces (Salavou, 2015). Through the strategy, it is possible to assess the selected firm’s strategic behavior and the reason why the firms have been able to dominate their respective industries compared to their competitors.
Slide 8: Usefulness of the Porters strategy
Besides, Porter’s usefulness in analyzing the selected companies is based on the fact that it helps in understanding the competitiveness of the business environment and means of identifying potential strategy’s profitability. For instance, the strategy shades more light as to the application of cost leadership strategy in the case of Wal-Mart will result in a competitive edge, unlike applying the same strategy in the case of Porsche car manufacturing. This strategy helps one to understand that different business environment determines the nature and type of strategy to adopt.
Slide 9: Alternative methods
The generic strategy framework is highly controversial basing on the fact that some firms consciously operate a hybrid strategy of combining both low cost with a differentiated product and still profitable. Hence, the assertion that one approach is effective for a firm to gain a competitive advantage fails to explain what happens to those firms that utilize both strategies. To address the assumption that distressed firms operate in a normally in competitive environments, it is essential to use alternatives such as the Resource-based perspective when reviewing a firm’s competitive behavior.
Slide 10: Resource-based perspective
An alternative method for analysis of the competitive advantage between the selected companies would be to consider their superiority basing acquired resources(Hitt, Carnes, & Xu, 2015).In this way, a substantial competitive advantage would be analyzed basin on its ability to receive unique resources that cannot be imitated by the competitors hence the difference between the companies. For instance, it can be argued that Wal-Mart’s competitive advantage is based on its superior resources rather than the strategy implemented.
Slide 12: Conclusion
This presentation has analyzed the use of Porter’s generic strategic in four selected companies, namely Wal-Mart, Best Buy, Marriott Hotels, and Porsche. By looking at Porter’s model, which proposes four components; Cost leadership, cost focus, differentiation, and focused differentiation, it has been established that each of the chosen companies gains a competitive advantage by implementing one of the porter’s generic strategic. Porter’s strategy has aloes been found to be useful, especially in explaining a company’s operating environment. Besides, an alternative method that can be used to analyze the selected companies in the resources based perspective, which examines a company’s competitive advantage basing on the resources available in their possession.
Thank You!
Essay Porter’s competitive strategies
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