Outline Theme 1. Porter Generic Strategies · Porter Generic Strategies 11-Jan-2018 5 Examples of Differentiation Focused Strategies 4. Focused Strategies We are here! Strategic differentiation

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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!

https://support.office.com/es-ES/article/b89770f1-deb1-4a19-94ef-342aa15a4689




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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4. Focused

Strategies

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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.






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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






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






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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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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

We are

here!

Summary and Conclusions






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.



• 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.





811-Jan-2018

5. Summary and

Conclusions

We are

here!







911-Jan-2018

5. Summary and

Conclusions

We are

here!

Thank you!


Documents

Outline Theme 1. Porter Generic Strategies · Porter Generic Strategies 11-Jan-2018 5 Examples of Differentiation Focused Strategies 4. Focused Strategies We are here! Strategic differentiation