Michael Porter's strategies recount on how a business organization seeks to gain a competitive advantage beyond its market extent

1. Running head: PORTERS GENERIC STRATEGIES
Porters Generic Strategies
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Introduction
Michael Porter's strategies recount on how a business organization seeks to gain a
competitive advantage beyond its market extent (Business Papers on Porter’s Strategy, n.d.).
Porter uses four generic strategies that a company can pick, as stated: cost leadership, cost focus,
differentiation focus, or differentiation. Porter’s affirms that depending on various factors such as
the size of a firm, nature of competition, and type of industry, generic strategies could ensure
competitive advantage in firms. He emphasizes the interplay between product differentiation
strategies, price minimization strategies, and demand-focused strategies for the success of any
business(David & David, 2016). The generic strategies by Michael porter reflect the choice
made concerning both types of competitive advantage and scope.
According to Porter, a company may choose Cost leadership strategies. The strategy
targets a wide market for its product and offers them at lower prices. Porter categorizes the
strategies as type one: low-cost leadership and type two as best value cost leadership. He
believes that for a company to apply this strategy effectively, the market needs to comprise a few
ways to achieve product differentiation, many price-sensitive buyers, where there are increased
buyers with bargaining power and where consumers do not care about distinction from brand to
brand. The strategy aims at underpricing competitors to drive out of the market and gain the
entire market share. Additionally, he states that a firm that employs the two types of cost
leadership is bound to gain a competitive advantage in ways that are hard for its rival to copy
(McGrath, 2013). In scenarios where a competitor copy the counterpart leader cost techniques
easily, the counterpart cannot gain their full potential marketplace. The main aim of the cost
leadership strategy is to minimize the total Company cost compared to the competitor's total cost.
Porter affirms that conducting value chain tasks efficiently than competitors, controlling factors

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that increase value chain cost, and elimination of various cost producing activities in the entire
chain could help in the accomplishment of the use strategy. However, Porter warns that there are
risks associated with the use of strategy. They may include; imitation of the strategy that lower
profits, tech advancement, which makes the strategy ineffective, and consumers' interest
swinging o other differentiation factors beyond price.
Differentiation strategies ( type 3)is the second strategy that a company may choose to
apply. In this scenario, a company target a broad market but offer differentiated products or
services with unique features. According to Porter, a company makes its product more exclusive
and attractive than its rivals through the differentiation approach. He states that for a company to
successfully apply the strategy, it needs proper research and development and the ability to
deliver high-quality products and innovation. Consequently, Effective marketing and flexibility
are also crucial for the market to understand the advantages of using unique products and for a
company to adapt to the dynamic market to curb competition from its rivals (Gardiner, 2016).
Porter states that a firm that applies this strategy has a creative approach and targets the outside
world. Additionally, he outlines conditions that the strategy is effective. They include; many
ways to differentiate the products or services; few rival firms follow the differentiation approach,
diversification of buyer's needs and uses, and fast technological advancement. However, the
strategy possesses several risks; consumers may not value the differentiated products to justify
the higher prices, and competitors may find ways to imitate the differentiating factor.
Similarly, Porter also advocates Focus strategies (type 4 and type 5) for an organization
to gain a competitive advantage. The strategy comprises little competition and a focused market
and targets a recess market and aims at cost minimization (Gardiner, 2016). The company

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chooses to target a transparent recess market to understand the changes in the market and
consumer's preferences and ensure minimized costs. Market penetration and development are
significant focus techniques. Porter affirms the condition appropriate for the application of the
strategy. They include; large, profitable, and growing market niche, market leaders do not
consider niche to be important, for their success, few rivals specializing in the same target
segments, among others. However, coping with the focus strategies by the rivals or drifting
clients' preferences towards products with features desired by the entire market are risks
associated with the application of the strategy. Porter asserts that cooperation among competitors
is the main means of achieving the above strategies.
In general, a company that targets customers in most, if not all, of its market segments,
based on offering products at lower prices, is said to follow a cost leadership strategy.
Consequently, if a company targets buyers in most if not all market segments based on properties
other than price, higher product quality or service is said to pursue a differentiation strategy to
remain cost-competitive. Additionally, a company that focuses on one or a few segments is said
to follow a focus strategy. The company may choose to offer products at a lower cost and with
differentiated features.
Conclusion
In summary, the concept of Michael Porter's strategies can be applied to determine how a
company gains a competitive advantage. Besides, the concept can be used to determine the
direction of a firm. A firm may choose the following approaches in their operations; cost focus,
differentiation, and cost leadership to ensure a competitive advantage over other competitors if
effectively utilized. A business premise needs to be aware of its competencies and strengths and
understand it's market and industry segment to choose the right strategy.

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References
(Business Papers on Porter’s Strategy, n.d.). Freelancing | Academic
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McGrath, R. G. (2013). The end of competitive advantage: How to keep your strategy moving as
fast as your business. Harvard Business Review Press.
David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach,
concepts, and cases. Pearson–Prentice Hall.
Gardiner, D. P. (2016). Integrating the strategy-project system for competitive survival. Future.