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Written By: Yekin, Staff Writer,
Michael porter competitive strategy gives headway for any kind of organization or business towards success.
Organization ability to base their core elements of their competitive strategy on any of Porter’s approaches, organization will definitely escape the pang of childhood towards building a sustainable competitive advantage.
As time goes on, these competitive advantages can support businesses or organizations to be better than their competitors, increase in growth and achieve a sound financial return.
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However, using any of Michael porter competitive strategy in your business, it must be done by selecting the most appropriate one and implement it in your day to day business activities.
Before exposing Porter’s strategy that can aid your business growth, it is highly imperative that we take a brief look on each strategy that was established by Michael Porter.
Porter is widely known as the father of modern business strategy. His most viral work are; Porter’s five Forces Modes and his other work on competitive strategies.
Michael porter competitive strategy was produced 40 years ago and till now; it is still relevant and form the bedrock of the wider field of competitive strategy.
According to Michael Porter, he defined competitive strategy as a long term plan that an organization executes in order to build a defensible competitive advantage against other players in the market.
To Porter, every business or organization need a competitive strategy and Porter’s model can be applied to product or service led businesses in virtually all firm or industries.
He furthered propounded three competitive strategies which are;
Organization that are after cost leadership strategy focuses on reducing costs to ensure that they can bridge market prices while producing a product or services that are the same with other competitors.
A successful cost leadership strategy is usually reliant on taking advantage of economy scale to realize operational efficiencies. There are several processes to achieve this particular target.
Building the core competencies to implement a cost leadership strategy effectively requires scale and it can be complex for smaller business to execute.
Some bigger or larger businesses that have the capacity to executes cost leadership strategy takes years of capital intensive investments in various elements of the value chain.
In implementing a differentiation strategy, a business focuses on creating products or services that’s more qualitative and superior to others in the market.
This particular strategy can be gotten through variety of means and is usually driven by the organization’s response to technological innovations, customer’s needs and market trends.
In implementing a differentiation strategy, it is imperative that organization stay alert on the market, give their competitors attention and forecast on the trend that may take over the market in the future.
Differentiation strategy is fantastic because it allow organization to peg a premium price on their products or services. This presumes that the basis of their differentiation drives increased value for target customers, underscoring the importance of paying attention to customers’ demands.
Focus strategy ensures that an organizations competitive effort is channeled towards a few smaller, well defined segments of the market.
This Michael porter competitive strategy is best fit for smaller organization that has little or limited resources to carry out differentiation or cost leadership strategy.
In summary, focus strategies usually take the form of either cost focus leadership or differentiation focus.
A focused cost leadership strategy is important for businesses that are competing on local geographical market, while cost effective leadership can be gotten through easy access to raw materials.
Organization that implement focus differentiation strategies target tend to provide value to a small segment of the market through production of unique products or services.
All the aforementioned Michael porter competitive strategy as propounded by Michael Porter can be applicable to any business. They all seem attractive to try and make use of all the three strategies in your business in other to maximize growth and expand your market share.
However, it is important for business owners or managers to rightfully select the best among these Michael porter competitive strategy and commit attention towards its executions.
Organization that decides to selects multiple strategies usually end up with no clear strategy thus, trailing behind their competitor that has a more defined and focused strategy.
Business that want to achieve everything May likely end up having nothing which is why it is necessary to focus on one strategy that is best fit for your business.
When figuring out the most effective Michael porter competitive strategy among this three, take a long and hard look at the main competencies of your business. Every business should be assertive about their products, services and they should endeavor to make research on how to understand their customer’s perception towards their products and services.
It’s ideal if a business hire a strategic consultant that have the experience and knowledge to lead the process of understanding your customer intents on your business. This will ensures a systematic process guided by a realistic, objective view of the business with accurate comparisons to competitors.
The process of picking a particular strategy should be done through a rigorous research and analysis of the business competitors and the market.
Business management or owners should conduct market research, realize the current trend that is related to the market and conduct a detailed competitor analysis to identify the potential gaps between your business and theirs.
It’s also helpful if other strategic framework can be applied to help select the right Michael porter competitive strategy for your business. For instance, the application of Porter’ five forces or SWOT analysis, which give a detailed look at an organizations’ strengths, weaknesses, opportunities and threats.
The realization of this aforementioned four possible factors will go a long way to assist business owners or management to select the best Michael porter competitive strategy to either curb a compounding problem or create a new style that will make their service unique from others.
In conclusion, finding and sustain a competitive advantage using Michael porter competitive strategy should be the core objectives of business managers’, since it determines all further strategic decisions and consequently, the whole business future performance and profitability.
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Published origninally on 31st Mar 2022 21:00:13
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