Porters Four Competitive Strategies Research Assignment (Essay Sample)

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Porter’s Four Competitive Strategies
Porter and Advantage (1985) identify four competitive strategies: cost leadership, differentiation, cost focus and differentiation focus that can help firms to gain a competitive edge over their competitors. A detailed explanation of the same is as given below.
Cost leadership: a firm is said to be a cost leader if it can produce goods at low cost and hence sell at low prices in the market. Low cost can be realized through economies of scale, technology, special rights to raw materials among others.
Differentiation: Differentiation refers to the uniqueness associated with goods or services that a firm offers to customers that make the product sell at a premium price. Differentiation can come in the physical attributes or chemical composition of the product, supply chains, the marketing approach, and mode of service delivery or responsiveness.
Focus/ Segmentation: this competitive strategy divides the market into portions that have similar characteristics so as to meet its needs adequately. The focus can be based on cost or differentiation. In essence, focus develops tailor-made products or services to suit a given market. For example, low-income markets may be offered cheap products while high-income markets may be offered quality products at a premium price.
How Competitive Strategy Determines Value Chain Structure
In the 21st century, Information systems have been at the centre of competitive strategy and tremendous changes in the value chains. Many firms have installed information systems in almost every aspect of their business something that has resulted in cost reduction, differentiation, and market segmentation. For example, in the medical field, systems that help doctors to track the progress of a patient after treatment while at home have been developed (Kroenke, 2014). Information systems have been found to reduce cost and bring about differentiation through automation. Automation has lowered cost by reducing no of staff required to do a task and e-commerce. Automation has also lead to high-quality products by eliminating errors and speed of information exchange. IT firms have learnt to segment as they have realized that ERP is not suitable for some organizations hence developing EAI (MIS, 2014). Also, the need for rapid exchange of information has led to integration between departments and firms.
Procter and Gamble Competitive Strategy
P & G’s competitive strategy is based on differentiation and focus. The company s...