Porters Generic Strategy

Porters Generic Strategy - A lexander Zouev M anagement SPC...

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Alexander Zouev Management , SPC Week 8 Are Porter’s generic strategies enough to guide operations strategy? Operations management is primarily concerned with how an organisation will deploy its resources and capabilities in order to partner the processes by which it produces goods and services for internal or external customers (Molloy, Lecture 2007). It is for this very reason that operations management is not only a provider of operational efficiency, but it can provide a potential source of strategic competitive advantage. One of the main theories surrounding operations strategy in the services and more primarily manufacturing sectors are Porter’s generic strategies. In this essay I will not only briefly explain what Porter’s generic strategies are and how they can guide operations strategy, but I will also argue whether they are sufficient enough to be used unaccompanied by other strategies and I will discuss what other alternatives there are to guiding operations strategy. In order to understand the arguments put forth later on in this essay, it is perhaps best we begin with a brief explanation of what Porter’s generic strategies actually are. The basis of porters generic strategy is the type of competitive advantage a firm can obtain: low cost or differentiation (Lecture, Pitkethly 2007). These two primary types of competitive advantage lead to three so-called generic strategies which enable a firm to achieve abnormal performance within its respective industry; cost leadership, differentiation, and focus (Porter, 1985). In brief, cost leadership means being the lowest cost producer in the industry as a whole, differentiation means the firm exploits a certain product or service which it believes to be unique, and focus basically means restricting activities to only part of the market (through either providing goods at lower cost (cost focus) or differentiated products (differentiation focus)). This generic strategies framework has been a major contribution to the development of strategic management literature, with many authors referring to Porter’s original works (1980 and 1985). Porter (1985) heavily emphasized the notion that the most basic choices that firms face are how the company will compete in the given market and how to achieve the most advantageous position. Sticking with Porter’s generic strategies - the strategies are not necessarily compatible with one another all the time. For example, if a firm tries to gain an advantage on all three fronts, then it is possible that it will gain no advantage at all. Porter famously argued that in order to be successful in the longer term, only one of the three strategies must be selected (Porter, 1985). If this is not the case, it is possible that the firm will become “stuck in the middle” of the three strategies. However, a popular counterargument to this claim can be that a single generic strategy might not be good enough within the same product because consumers want an array of satisfactions (quality, convenience,
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This note was uploaded on 04/12/2010 for the course ECON DEAM taught by Professor Vines during the Spring '10 term at Oxford University.

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Porters Generic Strategy - A lexander Zouev M anagement SPC...

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