Porters Concept of Being Stuck in the Middle - Essay Example

STUCK IN THE MIDDLE College STUCK IN THE MIDDLE In the modern business environment, strategic management has become an important topic not only for scholars but also for the managers that intend to propel their business to success. Porter is among early scholars that foresaw the complexity of strategic management and strived to provide a basis for developing a competitive advantage that will ascertain business success. Among other ideas, Porter warns that organizations must avoid “being stuck in the middle” if they have to win the market and survive in the long-term. Porter’s statement has sparked a wide range of controversy in the public domain attracting numerous perspectives of interpretation from modern scholars. While there are those who feel that Porters advice is relevant and provide managers with an incentive to create a clear and focussed strategy, there exist critics who feel that organizations can mix their strategies and still survive even in the worst competition. From a critical point of view, Porter idea suggests that organizations must focus on the best differentiation strategies that are crucial for their business. The advice of Porter is still relevant and provides organizations with the ability to focus on cost, quality and customer preferences which are crucial for business differentiation. Porter’s concept of “being stuck in the middle” has received a wide range of interpretation from various scholars. Porter’s generic strategy framework has become a basis for interpretation of his principles of strategic management. To begin with, Porter (1985) recognizes the modern market characteristics and the way competition has hit the market. Porter notes that the competition has heightened in the business market and that every company requires defining a competitive strategy both in the broad and narrow perspectives to remain profitable in the market. The idea of the scholar is real and seems to refer to the nature of business in the modern day. Competition has become inevitable due to existence of multiple investors with similar products. When competition arises, organizations are faced with the challenge of winning their customers for their survival. Porter seems to suggest an approach which organizations can use to support their competitive strategy. His idea is that companies that fail to adapt a unique business profile are bound to fail and will not survive in the long-term. Different scholars have provided a different explanation of idea of sticking in the middle that Porter put forward in his authorship. Cronshaw, Davis and Kay (1994) are among scholars who analysed this statement and presented different perspectives of explaining the claim of Porter. These authors perceive the concept of “stuck in the middle” as the inability of an organization to use a unique strategy that is way different from that of other companies. They suggest that each company must choose its own business strategy that best satisfies its customers. As a result, these authors bring about the idea of brand positioning in the market. Brand positioning refers to the various strategies that the management within an organization uses to roll out their products with the market in the most satisfactory manner. On this light, the implication of Porters statement could mean that an organization must use a single unique strategy rather than use a wide range of strategies that may lead to the loss of identity. Today, identity branding has become an important aspect of any organization. Today organizations use a systematic approach to create a unique image that customers can associate with their identity. Therefore, Porter’s ideologies are relevant in the contemporary business environment as managers still perceive identity branding as an important perspective of conducting business in a competitive business environment. Another school of thought has evolved interpreting Porters idea of organizations getting stuck in the middle as inability of an organization to utilize both cost and quality models as a way of inviting customers to purchase organizational products. This group of scholars refer to Porter’s generic business strategies in which he defines cost and differentiation as different business strategies that an organization should choose from. In his competitive model, Porter stated that companies are faced with the tough decision of making hard choices on the best business strategy and sticking to one rather than sticking to several. As perceived by these modern scholars, an organization that decides to use both strategies is bound to fail as it cannot accrue the benefits of both strategies optimally. For instance, if a company decides to invest on price reduction, the company should concentrate on minimising cost rather than achieving quality (Harfield, 2014) On the other hand, a company that decides to pay attention to their product quality should pay attention to this aspect rather than mix it with the cost strategy. On this note, any company that fails to specialize in their business strategy will face a hard time in convincing their customers and winning their loyalty. From a multidimensional angle, Porter’s advice has two sides of the same coin. It has attracted as much popularity as criticism within the public domain. Evidently, more companies support Porter’s ideas by focussing on differentiation strategies to win the market. A good example is the Samsung mobile company that has not become an international giant. The company has focussed on the value of streamlining quality within the market by investing in durable and superior applications that are unique in the mobile industry. While the organization has received criticism for selling expensive products, it is clear that the company enjoys a large volume of sales every year and an increase in the number of loyal customers (Hestad, 2013). On the other hand, companies such as Techno that have focussed on price competition strategies are slowly winning the market by enjoying high volume sales of middle class earners who cannot afford expensive mobile phones. On the other hand, companies such as Nokia that have focussed on both cost and quality are experiencing severe market competition in the mobile industry, which is a threat to the future survival. From this angle, it is clear that market positioning is a tough choice that a company has to make if they have to win their target customers. Porter was keen to isolate the impact of sticking at the middle by showing the negative consequences of inconsistency within strategic management. He states that; “The worst strategic error is to be stuck in the middle or to try simultaneously to pursue all the strategies. This is a recipe for strategic mediocrity and below-average performance; because pursuing all the strategies simultaneously means that a firm is not able to achieve any of them because of their inherent contradictions” (Porter, 1985) The implication of Porters idea is that a company can only benefit by specializing in one strategy and optimizing its performance rather than facing the challenge of implementing different strategies. A good example is the Laker Airways Company deployed a cost focus model, one of porter’s generic strategies, to win the North Atlantic market. The company enjoyed loyalty from the price-sensitive public and this resulted to high returns for the company. However, this did not remain the same when the management added frills, new services and routes, which made it lose its pre-established identity. The company became stuck in the middle, which led to the loss of its image as a price conscious company. The result of Laker Airways sticking in the middle was its eventual bankruptcy. From a critical point of view, there is need for companies to choose and sustain a single competition strategy to ensure that they maintain a desirable identity within the market. However, Porter’s ideology sparked criticism from a group of scholars who strived to provide prove that companies can still operate in the middle and remain profitable. Notably, a wide range of companies are focussing on the need to balance quality and cost as they have become sensitive parameters in the business market. Customers are looking for high quality products that cost less within the market. As competition heightens in the market, the customer’s bargaining power increases while that of organization decreases (Cronshaw, Davis & Kay, 1994). Therefore, companies are forced to provide both quality and low priced goods. In the practical sense, there is a load of evidence that many companies have focussed on more than one strategy to win the market. A good example is the Sainsbury, one of the largest supermarket chains in the United Kingdom. The company uses the slogan “Good Food Costs Less at Sainsbury” to illustrate their business strategy in the market. As the slogan pronounces, the company has focussed on both price and quality, what Porter may refer to as sticking in the middle. As result, the supermarket chain has managed to attract low, middle and high income earners who desired high quality foods that they can afford. Surprisingly, the company has remained top in the market and still enjoys loyalty from a large population. However, it is clear that Sainsbury strategy is still a subject of discussion by referring to Porter’s rule. To begin with, terming a product as a low cost is still subjective and may be to some extent vague. Comparatively, Sainsbury’s prices are much similar to those offered by other supermarket chains. Therefore, while the company may stand as an exception of the rule, it is clear that its slogan may be vague and its success can be attributed to its ability to maintain quality that customers desire. Secondly, when both strategies are applied, it becomes a challenge to establish which strategy has worked for the company. From this dimension, Sainsbury is a company that has yet to find its identity and one that can exploit a greater potential by identifying which strategies work best for its success. From a close look, Porter’ idea is best fitted for the post-modern business environment where product differentiation is paramount for business success. Harfield (2014) explains that Porter had the idea of brand position within unique market segments when he advised against being stuck in the middle. In the 21st century, companies have had to focus on specialization when striving to satisfy unique markets. For instance, as internationalisation becomes an important aspect of business development for western companies, market positioning becomes an important strategy. For instance, companies have to use different approaches while entering different markets in the global business scope. For instance, an organization that intends to enter in third world countries must be able to understand the economic position of the country and their purchasing power. For instance, if a company intends to enter a developing country where consumers have low purchasing power, the company has to use a price-based strategy rather than quality. On the other hand, it has to provide quality products for a public with high purchasing power (Buytendijk, 2010). From this perspective, Sainsbury should focus on either price or quality depending on the customers they intend to target. Companies that ignore product positioning are bound to fail when competition heightens in the market. In conclusion, Porter’s idea organizations “being stuck in the middle” is still a relevant advice in the modern business environment. Porter’s advice implies that there is need for high specialization if organizations have to target a unique customer segment. Unlike in the past when companies used a global strategy to appeal to wide range of customers in the same way, today’s market presents more distinct market characteristics. Therefore, a company has to begin by choosing a target segment before selecting one single strategy to roll out each product to the relevant customers. Companies that use different strategies lose their focus and cannot create a unique image for its business. In the long run, companies that stick in the middle and adopt different approaches to appeal to their customers are bound to lose their corporate image. Companies such as Sainsbury that have captured the UK market by using both price and quality-based strategies have yet to find their own identity. Porter’s ideologies are postmodern and seem to focus on global, rather than local business, where market characteristics are more complex and require a more specialized approach. On this ground, it is possible to recommend Porter’s generic competitive strategy as ideal for international companies that anticipate unique customer characteristics in different market segments. Bibliography Buytendijk, F, 2010, Dealing with Dilemmas: Where Business Analytics Fall Short. Hoboken: John Wiley & Sons Cronshaw, M, Davis, E, & Kay, J, 1994, On Being Stuck in the Middle or Good Food Costs Less and Sainsbury’s. British Journal of Management, 5, Pp. 19-32. Harfield, T, 2014. Strategic Management and Michael Porter; A PostModern Reading. Available at :< http://www.mngt.waikato.ac.nz/ejrot/Vol4_1/harfield.pdf> Hestad, M, 2013, Branding and product design: An integrated perspective. Surrey, England: Gower. Porter, M, 1985, Competitive Advantage, New York: The Free Press. Top of Form . Bottom of Form Read More