Leveraging a Generic Strategy
Grantham University
Generic strategies can be defined as the basic approaches to strategic planning that can be adopted by any organization in any market to improve its competitive performance. (www.businessdictionary.com).
If the primary determinant of an organization’s profitability is the attractiveness of the industry that it operates in, then the secondary determinant is its position in that industry. An organization can position 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” (“Porter’s generic strategies, 2010).
By applying these two strengths either in a broad manner or a narrow on, three generic strategies are resulted. Those generic strategies are cost leadership, differentiation, and focus. They are applied at the business unit level and are called generic because they are not organization or industry dependent.
“A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and the customers perceive to be better that or different from the products of the competition” (“Porter’s generic strategies, 2010).
The Coca-Cola Company has been an established trademark in the U.S. since 1886. The company has been able to differentiate themselves by being known as the world’s largest manufacturer, distributor and marketer of non-alcoholic beverages and syrups. “The Coca-Cola Company follows the differentiation strategy by spending enormous amounts of money in advertising to differentiate and create a unique image for their products” (Steven K, 2010).
The Term Paper on High Velocity Market Industry Product
Aministrative Policy and Strategy Strategies for Differing Company Situations A company s strategy must be matched to its external and internal conditions. The most important drivers in crafting a company strategy are the nature of the industry and competitive conditions; and the firm s own resources and competitive capabilities, market position and best opportunities. Some of the conditions that ...
Organization’s that succeed with a differentiation strategy usual have strengths such as leading research, a creative product development team, a strong sales team and the ability to communicate the perceived strengths of the product and corporate reputation for quality innovation. “The risks associated with a differentiation strategy include imitation by competitors and changes in customer taste” (Steven K, 2010).
With Cost Leadership Strategy, “the low cost leader in any market gains competitive advantage from being able to produce at the lowest cost. Factories are built and maintained, labor is recruited and trained to deliver the lowest possible cost of production ‘cost advantage’ is the focus” (“Generic strategies-micheal”, 2012).
Coca-cola has often defended its strategy in the U.S. in the soft drink industry by low in the home market. In 2011, the question was posed to Muhtar Kent, who was the chief executive of Coca-Cola, why they were not raising their prices more aggressively in North America due to rising input costs. Kent responding saying, “I don’t think we meet the criteria. We signaled out of the box that there would be more price increases and globally we have proved over periods of inflation that we are able to manage our business because of our multiple channels and packages. Every time there’s been a period of inflation we come out stronger” (Rappaport, 2011).
Since Coca-Cola is an already well established around the world, they do not need to apply an overall cost leadership strategy. Their prices do not need to be lower than their competitors to gain the advantage, because of the way they have differentiated their brand from others. Organizations that succeed in cost leadership strengths often include access to capital that is needed to make investments in production, skills in designing products for efficient manufacturing, expertise in manufacturing process engineering, and efficient distribution channels. (“Porter’s generic strategies”, 2010).
The Term Paper on Generic Organization
A group is a well structured organization with different individuals that has different characteristics and diversity these groups can be formal or informal. In my research I have found that retail stores such as Wal-Mart and Kmart has organizational structure. Group task satisfaction describes the group-level counterpart to individual job satisfaction and represents the group’s shared attitude ...
The focus strategy is “where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche or focus strategy is more suitable” (“Generic strategies-micheal”, 2012).
With a focus strategy, an organization focuses more on the efforts and resources within a defined segment of the market. The focus strategy sets out to achieve either a cost advantage or a differentiation. When organization’s uses a focus strategy they often have a higher degree of customer loyalty. “Because of the narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers” (“Porter’s generic strategies”, 2010).
But, some organizations that pursue a differentiation focus strategy are often able to pass higher cost to the customer since there may not be a close substitute of that product. When an organization succeeds in a focus strategy it is because they were able to tailor a broad range of product development strengths to a narrow market segment that they know well. Seeing how Coca-Cola is a well established organization, “…they do not use a focus strategy because Coca-Cola offers many different beverages to market to a broad scope of people” (Steven K, 2010).
Generic strategies are not always compatible with each other. “If a firm attempts to achieve an advantage on all fronts, in this attempt it may achieve no advantage at all” (Porter’s generic strategies, 2010).
Porter argues that to be successful over the long term, an organization should select only one of three generic strategies because choosing more than one could possibly have an organization stuck in the middle. “An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage” (Kar, 2011).
References
Generic strategies- micheal porter(1980).
(2012).
Retrieved from http://marketingteacher.com/lesson-store/lesson-generic-strategies.html
The Essay on Strategies for a University and Strategies for an Organization
It is important for representatives from all areas of college or university t9o identify and discuss alternative strategies that could be benefit faculty, students, alumni, staff and other constituencies. As you complete this exercise, notice the learning and understanding that occurs as a people express different opinions. Recall that the process of planning is more important than the document. ...
Kar, A. (2011, January 18).
Generic strategies for the ultimate competitive advantage. Retrieved from http://business-fundas.com/2011/generic-strategies-for-the-ultimate-competitive-advantage/
Porter’s generic strategies. (2010).
Retrieved from http://www.quickmba.com/strategy/generic.shtml
Rappaport, A. (2011, June 3).
Coca-cola chief defends pricing strategy. Retrieved from http://www.cnbc.com/id/43265157
Steven K. (2010, October 1).
Business strategies. Retrieved from http://team7coca-cola.blogspot.com/2010/10/business-stratagies.html
