outline theme 1. porter generic strategies · porter generic strategies 11-jan-2018 5 examples of...
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Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Outline Theme 1. Porter Generic Strategies
1. Porter´s Generic
Strategies Framework
2. Cost Leadership
Generic Strategy
3. Differentiation
Strategy
1
4. Focused
Strategies
5. Summary and
Conclusions
11-Jan-2018
We are
here!
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
2
Cost Leadership Differentiation
Differentiation
FocusCost Focus
FOCUS
Source of Competitive Advantage
Low Cost Differentiation
Broad Target:
Industry Wide
Narrow Target:
Single SegmentCo
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11-Jan-2018
4. Focused
Strategies
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Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
11-Jan-2018 3
Focused Strategies
4. Focused
Strategies
We are here!
• These strategies seeks to serve “NARROW” market segments.
• A firm can focus on particular customer groups, product lines or
geographic markets.
• The strategy maybe one of either “differentiation focus” where the
offerings are differentiated in the focal market.
• Or “cost leadership focus” where the firm sells at low cost in the
focal market or within the same group of competitors in the same
market.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
11-Jan-2018 4
Examples of Low-Cost Focused Strategies
4. Focus
Strategy
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Cost Minimization “within” a focused market. The company
seeks a low cost strategy in a specific target segment
IKEA PUMA Gas Energy
Volaris Airlines
Mex and Central
America
Family Dollar,
Dollar City, Dollar
Stores
Enterprise Rent-A-
Car
Hampton Inn
HotelsForever 21
Sally Beauty
Supply Stores
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
11-Jan-2018 5
Examples of Differentiation Focused Strategies
4. Focused
Strategies
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Strategic differentiation within a focused market. The firm
seeks a differentiation in the target segment.
Burberry
PerfumesRolex Watches Rolls-Royce Land Rover
Cinnabon MAC Cosmetics Breeze´s ResortsHigh Quality
Coffee Beans
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
68-Jan-2018
Generic
Strategies Competitive Advantage: Cost
Competitive Advantage: Uniqueness or
DifferentiationSco
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Walmart’s cost leadership strategy
depends on attracting a large customer
base and keeping prices low by buying
massive quantities of goods from
suppliers.
Nordstrom and Saks Fifth Avenue
build their differentiation strategy by
offering designer merchandise and
providing exceptional customer service.
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Narr
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In using a focused cost leadership, Dollar City
or Family Dollar does not offer a full array of
consumer goods, but those that it does offer
are priced to move.
Anthropologie follows a focused
differentiation strategy by selling unique (and
expensive) women’s apparel, accessories, and
home furnishings.
5. Summary and
Conclusions
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Summary and Conclusions
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
711-Jan-2018
5. Summary and
Conclusions
We are
here!
• According to Michael Porter, companies compete in two general
dimensions: The source of competitive advantage (cost or differentiation”
and the market scope (Broad or Narrow).
• Three possible generic business level strategies are possible:
• (1) Cost Leadership
• (2) Differentiation
• (3) Focused Strategies: Focused Low Cost and Focused Differentiation.
• In rare cases, companies can compete to offer both low prices and unique
features that customers find desirable. But there are some companies
which can do it, and they are following a Best-Cost Strategy.
Summary and Conclusions
• It is important to understand the difference between these generic
strategies, because each of them offer different value propositions to
customers.
• In addition, each company has a different value chain configuration (topic we
will see in the near future).
• For example when a company decides to pursue a differentiation strategy, it
will require extensive effort and investments in marketing and sales, while a
company following focused cost leadership strategy are successful with
limited marketing efforts (such as Dollar City or Family Dollar).
• When companies fail to follow their own business model and value chain
associated with each strategy, it is incoherent and expensive to implement it,
because the value proposition configuration is not aligned with the business
strategy.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
811-Jan-2018
5. Summary and
Conclusions
We are
here!
Summary and Conclusions
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
Leg 4. From Melbourne to Hong Kong.
Theme 1. Porter Generic Strategies
911-Jan-2018
5. Summary and
Conclusions
We are
here!
Thank you!