Porter's Generic Competitive Strategies

Paper Summary:

This paper discusses the work of Michael Porter and looks at his books, "Competitive Strategy" and "Competitive Advantage" in which he identifies two basic types of competitive advantage a firm can possess. The author discusses how many strategies there are and whether firms who follow only one strategy are 'stuck in the middle'.

Outline:
Introduction
Cost Leadership
Porter's Typology
Differentiation
Focus
Focus as a Separate Strategy
Cost focus
Differentiation Focus
'Stuck in the Middle'
Conclusion

From the Paper:

"In his books, Competitive Strategy (1980) and Competitive Advantage (1985) Michael Porter has identified two basic types of competitive advantage a firm can possess; low cost or differentiation. Moreover, he has formulated three generic competitive strategies aimed at achieving competitive advantage; namely, cost leadership, differentiation and focus strategies. Porter (1980) has also described a low profitability strategy which he called 'Stuck in the Middle'. At that time, the notion of generic strategy was very appealing as it seemed to offer the theoretical basis in an area which previously lacked solid theoretical foundations (Murray, 1988).
"In spite of the extensive empirical evidence which support Porter's (1980) typology of generic strategies, there has been much discussion and criticism for its conceptual limitations (Kotha & Vadlamani, 1995). It has been suggested that the focus strategy is just a special case of cost leadership or product differentiation and, therefore, there are only two competitive strategies. In this essay I will discuss how many strategies there are and whether firms who do not follow only one strategy are 'stuck in the middle'. In the following section I will review Porter's (1980) typology of the three generic strategies."

Sample of Sources Used:

• Chrisman, J. J., Hofer, W.C. & Boulton, R. W. (1988). Toward a System for Classifying Business Strategies. Academy of Management Review. [online] 13 (3), 413-428. Available from: http://www.jstor.org/cgi-bin/jstor/viewitem/03637425 /ap010051 /01a00050/0?frame=noframe&dpi=3&userID=a40bcc33@uwe.ac.uk/01c0a80a6d00501c10fb6&backcontext=page. [Accessed 10 March 2008].
• Jewell, B. (2000). An Integrated Approach to Business Studies. Harlow: Longman.
• Kim, E., Nam, D. I. & Stimpert, J. L. (2004). The Applicability of Porter's Generic Strategies in the Digital Age: Assumptions, Conjectures, and Suggestions. Journal of Management. [online] 50 (5), 569-589. Available from: http://jom.sagepub.com/cgi/reprint/30/5/569. [Accessed 10 March 2008].
• Kotha, S. & Vadlamani, L. B. (1995). Assessing Generic Strategies: An Empirical Investigation of two Competing Typologies in Discrete Manufacturing Industries. Strategic Management Journal. [online] 16 (1), 75-83. Available from: http://www.jstor.org/cgibin/jstor/viewitem/01432095/di007652/00p01532/0?searchUrl=http%3a//www.jstor.org/search/ArticleLocatorResults%3fhp%3d25%26si%3d1%26ArticleTitle%3d%26Author%3dsuresh%2bkotha%26JournalTitle%3d%26ISSN%3d%26MonthSeason%3d%26Day%3d%26Year%3d%26vo%3d%26is%3d%26StartPage%3d&frame=noframe&dpi=3&currentResult=01432095%2bdi007652%2b00p01532%2b0%2c00&userID=a40bcc38@uwe.ac.uk/01c0a80a6400501d2598e&backcontext=page. [Accessed 10 March 2008].
• Murray, I. A. (1988). A Contingency View of Porter's 'Generic Strategies'. Academy of Management review. [online] 13 (3), 390-400. Available from: http://www.jstor.org/cgi-bin/jstor/viewitem/03637425/ap010051/01a00030/0?frame=noframe&dpi=3&userID=a40bcc33@uwe.ac.uk/01c0a80a6d00501c10fb6&backcontext=page. [Accessed 10 March 2008].

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