INTRODUCTION Competitive advantage(CA) is an advantage competitors gain by providing or offering customers or consumers greater value for their money through product and service differentiation or through lower prices. Maintaining competitive advantage is crucial to many businesses or organizations' success in order to survive in the market. Competitive advantage is characterized by superior performance which could be an attribute to outperform the competitors whether current or potential; or gaining a higher market share in a particular industry thereby ensuring market leadership; or ultimately, maximization of profit.(JOBBER 2010) This essay will critically analyze how competitive advantage is created i.e. Porter's 3 generic …show more content…
It is a no-frill carrier. They were able to cut cost by operating a no-frill carrier i.e. they don't use tickets or travel agents. Focus Porter's focus strategy is a mix of both the differentiation and the cost leadership strategies i.e. difference or cost leadership within a small target market segment. For instance: a company should be able to differentiate its products based on a particular target market segment because if the differences in products does not appeal to consumers in that target market as opposed to consumers in broad market, there would be no basis for differentiation and competitive advantage will not have been achieved. Selecting the Right Competitive Strategy There are two schools of thought pertaining to how firms should choose the competitive strategy that best suits them. One is of the opinion that firms should choose one of the generic strategies and commit all resources to making it work. Porter belongs to this category. They believe that the value chain necessary for cost leadership is quite different from that of differentiation strategy and that while differentiation deals with better quality, cost leadership deals with lowering costs wherever possible.(DESS and DAVIES 1984) What porter articulated here is that there is need for strategic clarity. The 2nd school of thought opines that the strategies may be combined together to achieve CA. They believe that superior quality which is as a
2.Competitive Advantage – It includes the best product of an Organization in the competitive market.
Second strategy is “Differentiation Strategy” and if the company decides to choose differentiation strategy, they need to be attractive and unique. Innovation and product development according to customer’s needs are most important requirement to achieve competitive advantage. Cost Leadership Strategy and Differentiation Strategy focus on competing in the broad market. And the third and the last one is “Focus Strategy” and in focus strategy, companies focus on narrow or niche market. With choosing focus market, companies defined only their focus market and they still need to choose a strategy between “Cost Strategy and Differentiation Strategy”.
Competitive advantage exists when a firm has strategy, product or an attribute that makes the firm capable of delivering similar benefit to that of competitors at a cheaper cost. Having competitive advantage is not enough the company should be capable of sustaining that particular competitive advantage for a longer period of time.
To begin with, I am going to look at overall cost leadership from the 3 generic strategies. This strategy is for a firm who wants to achieve the lowest production and distribution cost so they can undercut the competition. This is actually very similar to the operational excellence
To survive and thrive, an organization must create a competitive advantage. A competitive advantage is a product or service that an organization’s customers place a greater value on than similar offerings from a competitor. Unfortunately, competitive advantages are typically temporary because competitors often seek ways to duplicate the competitive advantage. In turn, organizations must develop a strategy based on a new competitive advantage.
Porter’s typology discusses the strategies of low cost, differentiation, and focus (Parnell, 2008). The three strategies can be used by any business, but Porter suggests that a company should choose only one of the three types of strategy because, otherwise, risks could be involved along with the waste of resources. Furthermore, Porter’s typology states that management has to make a choice whether to put its focus on a part of the industry or the whole industry. Secondly, Porter’s typology requires management to choose between a low-cost strategy or a differentiation strategy. However, Papa John’s combines the low-cost with differentiation in order to set its strategy. Papa John’s is classified in the restaurant industry, but also falls into the category of specialty eateries, and then fast food. By choosing the strategy of offering only fresh ingredients and dough made fresh
A Competitive Advantage is a peculiarity for an organization between it's competitors . It's achieved either by lowering prices or by greatening the value of the product or by offering luxury service and benefits to cope with high prices .
Competitive advantage is that a company has better ability in earning profit and profit growth compared to its competitors for the same group of customers in one industry.
The manner in which firms are able to compete is most commonly categorized by implementing Michael Porter’s strategic typologies. Porter’s strategic theory has been the most widely accepted strategic approach used by fellow academics (Kim and Lim 1988; Bordean et al 2010). Porter proposed three generic strategies namely: cost leadership, differentiation and focus strategy. Warszawski (1996) later introduced a competitive strategy
Michael E. Porter, associate professor published the article titled “How Competitive Forces shape Strategy” in Harvard Business Review in 1979. This article is retitled as “The Five Competitive Forces That Shape Strategy” and published in Harvard Business Review in 2008. Michael E. Porter developed the model of Five Competitive Forces which is defined as “Competitive Strategy – Techniques for Analyzing Industries and Competitors”. It has become a main device for analyzing an organizations structure in strategic practices.
In order to achieve competitive advantage, a firm must perform one or more value-creating activity that is more superior compared to other competitors. Superior value is created through lower costs or superior benefits to the buyers.
First of all, Porter's Generic Strategy is defined as increasing market share, revenues and profits in order to overcome new markets to ensure survival. According to Martin (2014), the purpose of a business strategy is to be a drive force of the business; not a disposable or a weekend practice. A business needs to increase its’ sales if wants to “win” the benefit of other businesses, therefore it has chances to take customers away from competitors. In short, Porter’s Generic Strategy can be used in any type of businesses, no matter is profitable business or non-profit business. Its’ principle still remain universal. Porter's Generic Strategy is formed by cost leadership, differentiation and focus. Each strategy has different way to success. First of all, cost leadership strategy is a broad segment that a firm attempt to create low cost structures in order to be a price competitive. Secondly, differentiation strategy is a broad segment that a firm attempt to differentiate its’ offering quality or valuable products features. Thirdly, focus strategy is a narrow segment that a firm attempt to target a specific niche market to develop a competitive
Competitive advantages are conditions that permit an organization or nation to deliver a decent or administration at a lower cost or in a more alluring manner for clients. These conditions permit the gainful element to produce a bigger number of offers or unrivaled edges than its opposition. Competitive advantages are ascribed to an assortment of components, including cost structure, mark, nature of item offerings, dispersion and system, licensed innovation and customer support. Samsung had settled on the choice to receive design as a wellspring of competitive advantage in the 1990s. Prior, the company 's items had been unsatisfying and undifferentiated. In the mid1990s, the Group administrator, Kun-Hee Lee, started Samsung 's change from a low-end OEM into a world-class gadgets organization. Honing the company 's design aptitudes was a critical part of the activity. Be that as it may, this required significant changes in culture, procedures, and frameworks inside the organization. Samsung understood that competitive advantage can be accomplished through the design innovation. Samsung 's voyage toward design greatness began in 1993. That year, Lee supposedly went by a gadgets store in Los Angeles, USA. He saw, sadly, that the Samsung items in plain view looked ugly, while the results of Sony and some different organizations looked a great deal all the more engaging. He discovered too that the business staff at the store were themselves overlooking the Samsung
Porter’s generic strategies describe how a company attains competitive advantage across its chosen market scope. There are three generic strategies-cost leadership, differentiation and
* A competitive advantage is one that distinguishes a firm or a business from the competitors in the minds of the customers. It also refers to the state or condition that make a business more successful than the businesses it is competing with, or a particular thing that makes it more successful such as having a higher sales through offering low or affordable goods and services.