Both Porter and Miles and Snow’s strategy typologies are based on the concept of strategic equifinality, or the ability for firms to be successful via differing managerial strategies (Hambrick, 2003, p. 116). Porter 's strategy is more generic while Miles and Snow’s is more specific in nature. Porter’s generic strategy typology is based on economic factors centering on the source of a firm’s competitive advantage and the scope of a firm’s target market (González-Benito & Suárez-González, 2010). Porter’s typology emphasizes a firm’s cost, product differentiation or non-differentiation and market focus. When utilizing Porter’s strategy typology, a firm must first decide to target its products toward the mass market versus a market niche or focus. Secondly, a firm will determine if it wishes to minimize costs or differentiate its products with differentiation meaning that firms will most likely forego lower costs (Parnell, 2014, p. 184). This can lead a firm to develop a myriad of strategies between these options. Strategies which may have or not have focus, may or not be differentiated, may or not be low cost or any combination of strategies. In contrast to Porter, Miles and Snow’s typology is more specific in nature. …show more content…
Miles and Snow’s typology is centered on four types of businesses; each with its own strategy. These business types are those of prospectors, defenders, analyzers, and reactors. A prospector tends to be a firm which often introduces new products to the market (p.196). These businesses can be described as risk takers, typically being some of the first firms to introduce a new product to the market. Prospectors are flexible and meet industry changes head-on by rising to challenges and creating new and improved
Nucor Corporation was the largest manufacturer of steel and steel products in North America, with a production capacity of approximately 27 million tons. On an international scale, Nucor was ranked as the 14th-largest steel company in the world based on tons shipped in 2013. Amongst the five generic business strategies, Nucor is known as a low-cost producer, with a known competitive advantage of innovative steelmaking technology. The purpose of this paper is to perform a business analysis of Nucor Corporation by analyzing it using management tools such as SWOT, PESTEL, and Porter’s Five Forces (Thompson, Peteraf, Gamble, & Strickland III, 2014).
According to Parnell, Porter’s generic strategy typology consist of a “basic economic assumptions about cost versus differentiation, and the whole notion of focus and market orientation but this strategy has some limitation” (2014). This strategy typology helps to simplify a complex industry by identifying and emphasizing the key strategic factors. These factors are low-cost with focus, low-cost without focus, differentiation without focus and differentiation with focus.
When a firm sustains a profit that exceeds the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage (SCA). (QuickMBA, 2007) Michael Porter identified basic types of advantages used by businesses. Cost and differentiation advantages are positional advantages used by organizations to achieve that competitive through creating superior value for its consumers and thus increase profits for itself. In this session long project I will discuss strategic plans including; low cost, differentiation, focus, and preemptive. By comparing each strategic plan with one of Kraft’s SWOT elements, I will discuss a tactic for taking advantage of strength, opportunity, or managing a threat or weakness, and ultimately recommending which strategic plan in order to achieve SCA.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
There are four main business strategies that can be used they are Cost leadership strategy, Differentiation strategy, Focus strategy (low cost) and Focus strategy (differentiation). We can use Porter’s generic business strategies to understand the difference in these strategies.
Competitive strategy is the approach that an organisation takes in order to gain advantage over its competitors. According to Porter, there are two major sources of competitive advantages: costs and differentiation. Cost-based competitive advantage involves reducing production costs so that an organisation can earn higher profit margin or offer products at lower price compared to competitors. Differentiation-based competitive advantage involves offering unique properties that are not offered by competitors’ products. Differentiation allows an organisation to charge a premium for their products because they offer additional benefits to buyers.
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.
By using this structured analysis, firms can more easily evaluate the attractiveness of an industry and gain a complete overview of all relevant competitive factors that have to be considered in the process of establishment. It helps to better understand the present market structure and to evaluate as a consequence of that external threats and opportunities. Unfortunately, the analysis established by Porter is not a guarantee for success and above that, it is often accused for limitations, lack of considerations and inoperative outcomes. The non-observance of a collaborative economic behaviour and of governmental influence, the inflexibility of the model and furthermore lack of application to rapidly changing market conditions are major limitations that have to be considered.
As the two generic strategies is fundamentally different approach to creating and sustaining a competitive advantage, combining the type of competitive advantage as result our company seeks and the scope of its strategic target. The benefits of applying strategy for a particular target segment (focus) as a result our company won’t be require to compete with the other
Disruptive technologies offer a different type of attributes to the mainstream customer and therefore tend to be ignored and only valued in new markets or even make emergent of new markets. They usually look financially unattractive and are often disregarded by managers. Performance trajectories are used to measure the impact of a given technological innovation on an industry witch is the rate of the performance of a product has improved. One way to identify disruptive technology is by looking into the internal agreement of the technology (Bower and Christensen,
They become strategic when they help companies differentiate themselves from competitors over a long time period (Mazzucato, 2002). Strategy is seen as an advantage that a company get over its competitors. Regular improvements aren’t the key to success; it is not enough to keep the leader position. Strategy is how to perform differently from others rather than perform more efficiently, competitors can’t be aware of strategic decisions made by the organisation and can’t copy. For instance, Japanese companies are reputed to be strong in operational effectiveness, trying to improve constantly their activities giving to customers the best value product for the smallest prices (Lee & Trim, 2008). However these companies are missing a clear strategic position, they’re all similar because they copy each other, and it is hard for them to keep their leading position on the market. On the other side, there is company such as Ikea, the international furniture retailer which has established a clear strategy designed to facilitate the customer buying experience: giving them decoration ideas, simplifying the search, avoiding the help from sellers or decorators. Competitors never had the necessary skills to copy Ikea’s strategy, resulting in a superior strength and the key to efficiency and
There are three premises of corporate strategy, which any successful corporate strategy is built on a number of premises. The first premise is competition occurs on the business unit level, which diversified companies do not compete, only their business units do. The second premise is diversification inevitably adds costs