Generic competitive strategies

Generic competitive strategies describe how a company goes about the competitive advantage across the market that it is involved in. competitive advantage is a kind of a business concept that describes the attributes and ways for the company to defeat its competitors. Porter came up with the strategies which include the cost leadership strategy, differential strategy, and the focus strategy.

Cost leadership strategy in the one in which a business exercises its ability to produce a product or a service that is of lower cost than the competitors in the market. The knowledge on producing products and services which have the same quality and then selling it for lesser amounts gives the company a competitive advantage. This is because the customers are tempted to go for the products at a lower price but similar quality with the others in the same market. In the long run, this strategy leads to increased profits margin for the company. This can be achieved through the use of readily available raw materials and labor resulting in lower cost of manufacture. For this reason, Singtel has made services such as on the internet cheaper. They sell their internet bundles lesser and this gives them an advantage over companies such as StarHub.

Differentiation is another strategy, it involves a difference in the products and the services from the competitors. This includes making the products very attractive and the services unique to make them stand out in the market. From this strategy, the company is required to carry out researches on the likes of their customers to ensure that it is able to make the right decisions on developments. The innovation ability determines the difference the business makes in the market. This maintains the customers and increases their willingness to pay for the products and services. In Singtel, the network is strong and has a good reception for example. This makes it stand out from the competitors in this market in Singapore and other areas within its jurisdiction.

Focus strategy uses the concept of the company focusing the business on a few targets rather than going ahead to target everyone. It has proven mostly useful to the smaller businesses since they focus on the requirements that their customers have and how their advancements change them. This concept is known to have the customers give their inputs on the products and the services the company gives. This requires the company to identify the group they want to turn their focus on. For example, Singtel may decide to put the focus on the internet browsers. This means they would have forums and platforms to have feedbacks on the services they provide. They would also reduce the internet bundles upon request.

However, Porter put it clear that the strategies will not automatically make the business successful and that it’s not important to use the three strategies because that would make the company focus on the strategies and not the success. This leads to a situation known as “stuck in the middle” which limits the business from achieving the competitive advantage. The business should find a balance between the price and the quality which leads to good product and service provision. The price and quality depend on the brand image and their target considering competition in the market.

For a company to sustain its competitive ability in the market over a long period, it should keep on reassessing its development and the expectations of their consumers. Especially in a perfectly competitive market going into the price competition destroys sustain of the competitive advantage. Free entry and imitation lead to zero economic profit since this forces companies to go to the tangency point. The advantage can be sustained through the firms differing and isolating their mechanisms to protect their advantage over their competitors.