Sample Essay – Porters Generic Strategies
Choosing what position to take in the market in which a business function’s is an extremely important part of a company’s strategy. Michael Porter identified three basic strategies which basically cover the range of positions that a business can take in order to compete in the market.
Cost Leadership
According to this strategy a business competes by applying cost cutting measures to all levels of its value chains. A low cost producer will be hitting the highest profits in a market which is selling standardized goods at relatively standardized rates.
In such a situation low cost of production is not reflected in lower prices, but in fact the company then has a bigger margin of profit which it can reinvest back into the business.
In other situations however a low cost producer’s edge in the market might be that the producer is offering the good at the cheapest rates.
Differentiation
This strategy implies that a business is offering a unique addition to the product that is being sold in the market and in such a way that it adds value to the product from the customer’s perspective.
This value addition can be in any form, providing better services, adding a new feature to the product or maybe even giving more variety to the customer.
If the value addition is perceived as valuable by the customer then the producer will be able to transfer the costs to the customer or maybe even get a higher margin of profit.
These are just excerpts of essays please access the order form for custom essays, research papers, term papers, thesis, dissertations, book reports and case studies.
