First described by Michael Porter in his classic 1979 Harvard Business Review article, Porter’s insights started a revolution in the strategy field and continue to shape business practice and academic thinking today. Although your business may not use every element of these strategies, understanding their core principles can help you evaluate the effectiveness of your existing competitive strategy. A firm could either use cost advantage or differentiation. We’ll look at several models he developed including the 5 Force model, the value chain and the generic strategies model. A six-time winner of the McKinsey Award for the best Harvard Business Review article of the year, Professor Porter is the most cited author in business and economics. And this leadership is usually achieved through economies of scale, technology, or maybe from unique access to raw materials. Cost Leadership; Differentiation Thereby a firm can have either of the three strategies: Cost leadership; Differentiation Late 70s. Michael Porter is from Harvard and is famous for thinking in business about competitive strategy. These initial strategies as described by Porter were: Cost Leadership (cheap, no expenses), Differentiation (unique or premium products) and Focus (a specialised service or market). Generic Strategies. The four strategies to choose from are: Cost Leadership strategy. They were first set out by Michael Porter in 1985 in his book, "Competitive Advantage: Creating and Sustaining Superior Performance." Most industries only have one cost leader. Value Chain. Later he divided the focus strategy in t two sub categories namely Cost focus and Differentiation Focus. However, Harvard professor Michael Porter, identified four major types of competitive strategies that businesses often implement, to varying degrees of success. Late 70’s developed 3 models to help us think about strategy. In the Michael Porter’s Generic strategies, three main strategies are used as the base namely, Cost leadership, Differentiation leadership and Focus. 5 Force Model. Competitive strategy is the search for a … The Five Forces is a framework for understanding the competitive forces at work in an industry, and which drive the way economic value is divided among industry actors. Differentiation. Competitive Strategy: The Core Concepts Competition is at the core of the success or failure of firms. Porter’s generic strategies. He later sub-divided Focus into two different strategies: Differentiation Focus (unique strategy differentiation in a focused market) and Cost Focus (lower costs in a focused market). Porter identifies three generic strategies for competitive advantage: Cost leadership – Become the lowest cost competitor. Michael Porter Competitive strategies involve taking offensive or defensive actions to create a defendable position in the industry. According to Michael Porter, there are four generic strategies. Generic strategies include ‘overall cost leadership’, Competitive Strategy. Meanwhile, the firm could have a broader scope or narrow scope. Michael Porter uses 4 strategies that an organisation can choose from. Competition determines the appropriateness of a firm's activities that can contribute to its performance, such as innovations, a cohesive culture, or good implementation. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). Competitive Strategy: Techniques for Analyzing Industries and Competitors, by Michael Porter, 1980 The Competitive Advantage of Nations, by Michael Porter, 1989 Competitive Advantage: Creating and Sustaining Superior Performance, by Michael Porter, 1985 Michael E. Porter is the author of 18 books and numerous articles including Competitive Strategy, Competitive Advantage, Competitive Advantage of Nations, and On Competition. According to Prof. Michael Porter, the firm’s position could be categorized into one of the two broad strategies. In some ways, this strategy can be seen as both offensive and defensive in regards to competitive forces. Mgt 680 Competitive Strategies Introduction The model Michael Porter describes discusses how strategy is the process of taking action that will create a defendable position within an industry. Thinking comes from Michael Porter of Harvard. 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