Porter’s Generic Strategies
Introduction
Thesis: Corporate entities can enhance competitiveness by using Porter’s generic strategies
Purpose
Companies are being established at such a rapid rate. This has resulted into high levels of competition in almost all sectors. In this paper, the concept of Porter’s generic strategies will be examined. The use of this concept towards establishing competitive strategies shall also be analyzed.
Overview
Michael Porter is one of the world’s most renowned business strategists. His generic strategies provide an excellent framework for any corporate entity to prevail or achieve its targets. In the field of management and technological innovations, Porter’s generic strategies have been used to develop competitive frameworks in numerous organizations. Based on his concepts, Michael Porter has highlighted the critical role played costs and differentiation in business. (Daft, p. 107)It would be difficult for modern day organizations to thrive without developing competitive strategies.
Technological Policies and Competitive Strategies
Enhancement of efficiency stands out as a crucial factor in modern day management. Even though there are numerous avenues for enhancing organizational efficiency, technological perspectives must be considered. For instance, the most effective communication platforms are based on current technologies like the internet or global positioning systems. As a result, corporate entities must develop policies that conform to all technological requirements. (Porter, p. 90)
However, such policies cannot be developed without considering different competitive strategies for the organization. Porter’s generic strategies help in aligning competitive strategies with technological policies. Cost is one of the main components of Michael Porter’s generic strategies. Based on the specifications of this component, companies must adopt technological policies that are associated with minimal costs.
Differentiation is also another critical aspect of Porter’s generic strategies. Differentiation enables companies to establish technological policies that enhance the quality of output. Differentiation and costs are two of the most essential aspects of Michael Porter’s generic strategies. These perspectives strongly determine the effectiveness of an organization’s competitive strategies in the market. (Porter, p. 95)
The world’s most successful companies like Wal-Mart are founded on excellent technological policies. As a result of such policies, these corporate entities have a competitive edge over their competitors.
Strategy as a Function of Quality and Quantity of a Firm’s Capabilities
A firm’s strategic plan speaks volumes about its capacity. It is easy to determine whether an organization is ambitious or redundant based on its strategy. According to Michael Porter, strategy plays a bigger role in organizations as compared to other perspectives such as finance. A firm might have an excellent financial base but that cannot guarantee success without an effective strategy. Essentially, strategies provide a framework for critical aspects including resource allocation, human resource management, expansion programs and marketing policies among other issues. (Ansoff, p. 27)
A combination of these perspectives determines the overall performance of an organization. As a function of quality a firm’s capabilities, strategy outlines organizational standards. On the other hand, as a function of quantity of a firm’s capabilities, strategy specifies organizational thresholds and limits. Such perspectives are pivotal towards the performance of any corporate entity. Additionally, it is also important to note that organizational strategies play a crucial role towards mitigation of risks.
Any corporate entity is faced one or more forms of risks. Such risks can easily undermine organizational performance if the relevant mechanisms are not established. However, effective strategies outline the various measures that might be used in averting such risks. Strategies play a critical role towards promoting a firm’s relations with external stakeholders. Such an approach helps a lot in enhancing a firm’s capabilities. (Hitt, p. 142)
Frameworks for the Product/Technology Matrix
A product/technology matrix is comprised of distinct entities. All the components are associated either directly or indirectly. This matrix goes a long way towards enhancing the quality of a firm’s strategy. Cost is one of the main perspectives that comprise this matrix. As outlined in previous sections, firms must develop strategies in such a way that they minimize costs. Higher costs result into higher expenditures for any organization. The overall performance of companies depends a lot on its capacity to minimize costs. When an organization minimizes production costs, it becomes easier to set affordable prices for clients. (Essien, p. 36)
Minimization of costs is therefore an essential perspective in the development of competitive strategies. As a component of the product matrix, differentiation enhances the quality of production. Quality also plays a critical role in competition. This is because most customers are willing to pay more for products or services of higher quality. (Porter, p. 101)
Conclusion
Michael Porter’s concept (generic strategies) is an essential tool for development of effective competitive strategies in firms. This is because it provides a multidisciplinary approach for assimilating competitive strategies in technological policies. Essentially, strategies provide a framework for critical aspects including resource allocation, human resource management, expansion programs and marketing policies among other issues. A combination of these perspectives determines the overall performance of an organization. Any corporate entity is faced one or more forms of risks. Such risks can easily undermine organizational performance if the relevant mechanisms are not established. Through the enhancement of competitive strategies, organizations can easily attain targets.
References
Ansoff, H. I. (2007). Strategic management, NY: Palgrave Macmillan
Daft, R. L. & Lane, P. (2009). Management, OH: South-Western
Essien, W. I. (2012). Strategic management, IN: Authorhouse
Hitt, M. A. & Ireland, D. R. (2012). Strategic management: Concepts and cases, OH: South-Western
Porter, M. E. (2009). On competition, Harvard: Harvard Business Press
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