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Porter generic strategy ppt

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Porters Generic

Porters Generic

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    Porter generic strategy ppt Porter generic strategy ppt Presentation Transcript

    • PORTER’S GENERIC STRATEGIES
    • Porter Generic Strategy - FMCG Team Member: Sureshkumar Maurya – MMM 11 Jayshree Naik - MMM 14 Maheshkumar Singh - MMM 23 Nikhil Mali - MMM Himmat Gupta - MMM
    • Top 10 FMCG Companies in World (2013) Rank Company Market Value ($ in Billions) 1 Nestle 233.5 2 Procter and Gamble 208.5 3 Coco-Cola 173.1 4 Anheuser-Busch InBev 153.5 163.2 5 Philips Morris International 150.6 6 Unilever 122.3 7 Pepsico 118.9 8 British American Tobacco 102 9 Reckitt Benckiser Group 51.2 10 General Mill 29.9
    • Top 10 FMCG companies in INDIA (2013) Rank Company Market Value ($ in Crores) 1 ITC Ltd. 256,769 2 HUL 127,144 3 Nestle India 49,768 4 Godrej Consumer Products India 28,107 5 Dabur India Ltd 26,272 6 GlaxoSmithKline Consumer Healthcare 23,435 7 Colgate Palmolive 18,329 8 Marico Ltd 13,137 9 Emami 10,788 10 Procter and Gamble 9,555
    • Introduction…  Michael Porter is a professor at Harward Business School.  A firm’s success in strategy rests upon how it positions itself in respect to its environment.  Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation.  By applying these strengths in either a broad or narrow scope, generic strategies result:, Cost leadership Differentiation, and Focus (Cost Focus and Differentiation Focus)
    • Cost Leadership • Superior profits through lower costs. • E.g. : Wal-Mart, Micromax phone Differentiation • Creating a product or service that is perceived as being unique “throughout the industry” • E.g. : Mcdonald, Nokia, Samsung Focus • Concentrating on a limited part of the market. • Cost Focus • Differentiation Focus • E.g. : PepsiCo, Apple I-phone, Vertu Generic Strategies
    • Target Scope Advantage (Low Cost) Advantage (Product Uniqueness) Broad Cost Leadership Differentiation Narrow Focus Strategy (Cost Focus) Focus Strategy (Differentiation) Porter’s Generic Strategy…
    • Porter Generic Strategy
    • Cost Leadership Strategy  Aiming to become Lowest Cost Producer  The firm can compete on the price with every other industries and earn higher unit profits.  Cost reduction provides the focus of the organisation’s strategy.  Targets a broad market.  Competitive advantage is achieved by driving down costs.  A successful cost leadership strategy requires that the firm is the cost leader and is unchallenged in this position.  Especially beneficial : where customers are price sensitive
    • Type : Public Industry : Beverage Founded : 1886 Founder(s) : Asa Griggs Candler Headquarters : Coca-Cola headquarters, Atlanta, Georgia, U.S. Number of locations : +200 Area served : Worldwide Employees : Approx. 2.1 million (2011) Fla : Cola, Cola Cherry, Cola Vanilla, Cola Green Tea, Cola Lemon, Cola Lemon Lime, Cola Lime, Cola Orange and Cola Raspberry.
    • Brand
    •  Focusing on cost leadership through disciplined working capital management and tight operating expenses control.  Optimization of the production and distribution infrastructure  Personal cost ownership throughout the organization  Logistic excellence  Daily Average serving from 9 peoples (1886) to 1.8 million people now.  Ensure the strongest and most efficient production, distribution, and marketing systems possible  The established Coca-Cola HBC Business Services Organization (BSO) that standardizes, centralizes, coordinates and simplifies certain Finance and Human Resources processes to improve productivity and provide important transactional services at a lower cost
    •  Access to the capital required to make a significant investment in production assets.  Design skills for efficient manufacturing  High level of expertise in manufacturing process engineering.  Efficient distribution channels. Success Mantra…
    • Risks Involved..  Other firms may be able to lower their costs as well.  As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage.  It could lead to a damaging price wars.  There might be difficulty in sustaining cost leadership in the long run.  A firm following a focus strategy might be able to achieve even lower cost within their segment.
    • Differentiation Strategy  A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers.  Customers perceive the product to be different and better than that of rivals.  The value added by the uniqueness of the product may allow the firm to charge a premium price for it.  Differentiation can be based on product image or durability,after-sales,quality,additional features.  It requires flair,research capability and strong marketing.
    • Uniqueness Buyers’ ValueDifferentiation
    • McDonald’s
    • Type : Public Industry : Restaurants Founded : McDonald’s Corporation Founder(s) : Richard and Maurice McDonald,( McDonald’s restaurant concept ) Ray Kroc,( McDonald’s Corporation founder ) JV in India : Vikram Bakshi & Amit Jatia Headquarters : Oak Brook,Illinois,US Area served : Worldwide Key people : James A. Skinner (Chairman & CEO)
    • Number of Restaurants : +33,000 in 118 countries Customers : appr. 67 million / day Products : Fast Food ( hamburgers , chicken , french fries , soft drinks , coffee , milkshakes , salads, desserts , breakfast )  McDonald's customers are of all classes, but largely working, and people of all ages.  McDonald’s strove to meet a customer wait time at no more than one minute in line and 30 seconds at the counter.
    •  McDonald's understood that the parent was making the purchasing decision, most likely based solely on price. What McDonald's marketing executives did was ingenious. They put a toy in with the hamburger, french fries, and Coke. Then they gave it a special name, calling it a Happy Meal. Then they marketed it to the kids.  McDonald's knows that some customers go to its stores to take a quick break from their day's activities and not because McDonald's was able to make their food ten seconds faster than a competitor. So McDonald's marketing executives then put together the phrase, “Have you had your break today?”  They've taken competing on price right out of the picture,” says Greshes. “They bring you quality, convenience, service, and value — and they make you feel like you are getting a break in your hectic day.
    • Success Mantra…  Access to leading scientific research.  Highly skilled and creative product development team.  Strong sales team with the ability to successfully communicate the perceived strengths of the product.  Corporate reputation for quality and innovation.
    • Risks Involved…  Involves higher costs.  Customers might become price sensitive and choose on price rather than uniqueness.  Customers may no longer need the differentiation factor.  Imitation by competitors and changes in customer tastes.  Rivals pursuing a focus strategy may be able to achieve even greater differentiation in their market segments.
    • Focus Strategy  The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation.  The premise is that the needs of the group can be better serviced by focusing entirely on it.  A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly.  Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers  However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist.
    • Type : Private Industry : Animal food manufacturing Founded : North Carolina,U.S.(1986) Founder(s) : Frank C. Mars Headquarters : 6885 Elm Street, McLean, Virginia, US Area served : Worldwide Key people : Steven Badger(Chairman) Paul S. Michaels (President and CEO) Employees : Divisions : Subsidiaries : Wrigley Jr. Company Reckitt Benckiser
    •  The company makes the market leaders Pedigree (dog food) and Whiskas (cat food), as well as kitekat (cat food) and Pal (dog food).  By successfully adopting the 'focus' strategy since 1950, Mars Inc. has emerged as the largest consumer animal food company.  The leading exporters of pet food for 2004 were France ($993 million), United States ($786 million) and the Netherlands ($511 million),[6] while the leading importers were Japan ($718 million), Germany ($617 million) and the UK ($563 million)..  Top Brand are Cesar, Greenies, Nutro, Pedigree, Royal Canin, Sheba, Whiskas, KiteKat, Chappi, Catsan
    • Success Mantra…  Lower investment in resources.  The firm benefits from specialisation.  Provides scope for greater knowledge of a segment of the market.  Makes entry to new markets easier and less costly.  Firms using a focus strategy often enjoy a high degree of customer loyalty.
    • Risk Involved…  Limited opportunities for growth.  The firm could outgrow the market.  Danger of decline in the chosen segment or niche.  Risk of imitation.  Risk of changes in the target segment.  A reputation for specialisation inhibits move into new sector.
    •  Cost Leadership - Being the lowest cost producer in the industry as a whole  Differentiation - The exploitation of a product or service which is believed to be unique  Focus - Restricting activities to only part of the market through: - Providing goods or services at lower cost to that segment (cost focus) - Providing a differentiated product or service to that segment (differentiation focus) We have Learnt…