This presentation aims to critically evaluate the Generic Strategies. Not all the time these strategies are sucessful, Even the big guns in the industry have falied in may occasions.

1. Introduction
In the era of globalization, companies from various
industries are surrounded with many
competitors where using a different management
strategies become essential to success
and sustain in the competition. The purpose of this
report is to identify Michael Porter's generic
strategies and critically analysis them using a
contemporary examples.
Work by
Himanshu Shrivastava

2. Porter’s Generic Strategies:
• Michael Porter’s Introduced Generic Strategy in his
book Competitive Advantage: Creating and
Sustaining Superior Performance in 1985.
• He Suggested that every Company‘s backbone falls
either in Cost Advantage or Differentiation.
• By taking the prospect of Narrow or Broad Market
Scope it is further distinguished into Three heading:
Cost Leadership, Differentiation and Focus
Strategies.

3. Cost Leadership
• Plan of action that to do everything conceivable to
bring down its cost structure, to make and offer
goods and services at lower price (Porter, 2004).
• A successful strategy usually requires a large
market share advantage or cheap raw materials,
labour, or some other important input (Dess & Davis,
1984).

4. Advantages of Cost Leadership
• Builds up an aggressive edge of competition, by
offering low prices to potential customers because of
low cost (Jones & Hill, 2012).
• Cost leader gets an advantage of reducing its price
in case the substitute product enters into the market
(Lynch, 2003).

5. Southwest
• Offers the fare 25% or more below than those of it
rivals.
• Uses various strategies like using Boeing 737, using
cheap landing stations etc. to keep there costs low.

6. Limitations of Cost Leadership
• Competitor can discover the approaches to deliver
products/services at low cost and can beat cost
leader (Walters and Samiee, 2002).
• Demand of cost leader goods or services can be
affected by the existing competitors with high brand
image and brand loyalty (Manrai et al., 2001).

7. Bic’s vs Gillette
• Bic’s covered the huge market when they introduced
a low cost disposable razor.
• Gillette followed their low cost strategies and shorter
their market share.
• Gillette’s brand image helped them and affected the
demand of Bic’s Razor.

8. Differentiation
A competitive strategy used by the
company in offering a service or product
which has a different features or unique
brand than the other competitors so they
could create an innovative brand image of
their company (Lewis, 2007).

9. Advantages of Differentiation
• The strategy enables the company to charge a
premium price to customers ( Wit & Meyer, 2007).
• Help the company to have a dominant brand image
in the market so could create a customer loyalty (
Hill & Jones, 2008).

10. A company’s breakthrough of improving
customer satisfaction by creating new
services (Johnson & Scholes, 2001) .

11. Limitations of
Differentiation
• The sustainability of the brand uniqueness is in
doubt since competitors might imitate it (Google
Books, 2015).
• Take a lot of sources in developing brand core
competencies (Google Books, 2015).

12. In 2004 they lost a market interest and over expanded
where people that time concern about having a
healthy and low-carb food. The company fails on
dealing with external factors (Ireland, Hoskisson &
Hitt, 2008). .

13. Focus cost leadership
Definition :
1. In focus cost generic strategy a firm focus
on very specific, frequently slender, section of
the business.
2. Focus strategy concern at growing at
growing market share and they operate in
niche market more successfully than
competitor(Akan, Allen, Helms & Spralls,
2006).

14. Advantages of Focus Cost Strategy
1. Focus cost strategy earns profit above average as the
firm operates on value creation and protection from five
forces because new entrants have to overcome
customer loyalty(Jones & Hill, 2012).
2. Firms can increase its market segment and at a same
time compete with the market leaders(Jones & Hill,
2012).
3. Focus cost strategy help in gaining market share and
useful while entering new market(Partridge & Perren,
1994).

15. Example
First Global Xpress (FGX) success in logistics by focusing
on very specific cities of U.S.A and implementing low
cost(Partridge & Perren, 1994)

16. Limitations of Focus Cost Strategy
1. Low quality of product due to low investment as only
focus is on cost reduction(Partridge & Perren, 1994).
2. The supplier power is more as input is small volume(Hill
& Jones, 2008).
3. Brand perception of quality of products decreases and
hence result in decrease of market share(Shafiulla,
2004).

17. Example
TATA Motor’s Nano looses market share due to poor
perception regarding quality of world’s cheapest car.
(Bursa, 2010) (Shafiulla, 2014) (tatamotors.com, 2015)
(Philip, 2013)

18. Focus Differentiation
• It constrained about creating a distinctive
product/services that fulfil the needs and desires of
limited market segment.
• The product/service should be on higher levels of
quality comparing to rivals , to gain the customer’s
trust and apperception .
(Pitt & Koufopoulos, 2012)

19. Focus Differentiation Advantages:
• Companies get profit than average because they
could charge premium prices for their special
product/services (Whitehead, 2011).
• Focus in one segment help to be an expertise in one
field(Kreitner & Cassidy, 2011).
• Limited competition (Whitehead, 2011).
• Brand loyalty(Kreitner & Cassidy, 2011)

20. Louis Vuitton
• Targeted the rich people .
• Offer a high quality clothing and accessories .
• Charge a premium prices .
(Ireland, Hoskisson & Hitt, 2009)

21. Focus Differentiation Limitations
• Difficulties growth in the same market(Jones & Hill,
2010)
• The segmented customers could be disappear
because of different circumstances(Morden, 1999).
• Companies need more effort and creativity to stay
distinctive(Jones & Hill, 2010)

22. Groupon
• Targeted customer who are interested in offers and
discounts .
• Start to lose market share because Google and
amazon started to offer services with same benefits
.
(Hill and Jones, 2013)

23. Main Arguments about Generic
Strategies.
• Stuck in the middle one of main issues that could
face companies as Porte's clarified (Peng, 2009).
• Many companies shows it success by using more
than one strategy(Nandakumar, Ghobadian and
O'Regan, 2011).
• Situational analysis and five forces analysis
should be used before taking decision about
choosing the strategy(Partridge & Perren, 1994).

24. References
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