Five Generic Competitive Strategies


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5.Five Generic Competitive Strategies

Five Generic Competitive Strategies

By M.T.Doniyorova

Plan for the lecture

The meaning of Competitive Strategy

Competitive Strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value ”

Michael Porter

Introduction

  • Michael Porter identified four possible competitive strategies in the book “Competitive Advantage” published in 1985 in order to achieve a better result in the competition in the industry.

Generic Strategies


Narrow Target
Broad Target
Lower Cost
Differentiation

Generic Strategies

  • Competitive Scope defines the breadth of the firm’s target market within its industry.
  • Industry or market
  • Here a firm can have:
  • Broad Target which serve many or all segments in the industry
  • Narrow Target where the firm focuses on customers only in selected segments. The focus can be more narrowly targeted at these customers` special needs.

Broad Target
Narrow Target
Lower Cost
Differentiation

Generic Strategies

  • Competitive Advantage is anything that gives a company an edge over its competitors, helping it attract more customers and grow its market share.
  • Lower Cost where the firm offers comparable product cheaper than the competition in the industry or the selected segment.
  • Differentiation where the firm offers a service or product that is perceived as unique compared to its competitors. By doing this the firm isolates itself from industry rivalry. Consequently the costumers become more loyal and less price sensitive


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