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Generic Strategies for Competitive Advantage - Essay Example

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The writer of the essay "Generic Strategies for Competitive Advantage" suggests that in a market-place where companies crowd to grab the few available customers, a business has to formulate an amicable strategy to win the majority of the buyers and maximize profit…
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Generic Strategies for Competitive Advantage
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Download file to see previous pages In 1985, Michael Porter came up with a set of strategies that he had termed as Generic Strategies. These strategies have, since then, been universally plausible to many enterprises across the globe. The Generic Strategies were proposed by Porter so as to help businesses boost their competitive advantage over the others. The competitive advantages are the unique best practices that single out a business in a competitive marketplace. The three Generic Strategies are Cost leadership, Differentiation, and Focus strategies. These three approaches can be applied to all forms of organizations that deal with either goods or services delivery (Porter, 1980, Pp87).
The Cost Leadership is one form of generic strategy that can be used by a company to gain the competitive advantage over its competitors in a competitive market. The cost leadership generic strategy can be applied in two different ways so as to a maximum competitive advantage. Cost Leadership, as it sounds, simply means gaining competitive advantage in the market through low cost. The cost leadership as a strategy involves two methods: One, a company can strategize to make maximum profit by lowering the cost of production while still charging average prices in the industry. Two, increasing the market share through lowering prices of the products while still making some reasonable profit (Kiechel, 2010, Pp99).
Lowering the cost of production will help an enterprise maximize profit since there will relatively lower input in the business. Lowering the production cost involves cutting the expenditure on supplies and reducing the wages offered to the workers. In some desperate cases, companies are forced to reduce the number of employees to allow them to make savings. However, this can have usually painted a bad image of a company in the market. In the long run, companies may lose potential customers instead of making the intended profit. ...Download file to see next pagesRead More
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