According to Michael Porter, three generic strategies are essentially profitable for an organization and are applicable at the business level. These generic strategies include cost leadership, differentiation, and focus strategy. Obviously, these strategies have several similarities and differences. While cost leadership implies having a lower cost than that of competitors in the same industry, differentiation strategy means an organization’s ability to produce unique products or services more than competitors. On the other hand, a focus strategy implies that an organization’s products or services are channeled towards a particular group, segment, or market which is called …show more content…
This organization uses cost leadership and differentiation generic strategies in the production and marketing of athletic shoes. While Nike maximizes its athletic shoe production and sells at a reduced price, the organization also introduces a unique product that has a cutting-edge design. For instance, when the competition between Adidas and Nike became obvious, Nike introduced a cost leadership and differentiation strategy and eventually separated itself from Adidas (Gregory, …show more content…
This strategy encourages an organization to sell its products and services at a price that is averaged of the stipulated industry price or even lower than the industry price so that in any circumstance, other competitors would not equal its profits margin. In the narrow focus strategy, an organization implement a differentiation strategy; that is the ability to increase the value of a product or service, and sell it to a specific and targeted segment of the market which we refer to as ‘niche’ (Carpenter, Bauer, & Erdogan, 2010). The difference in these strategies is that a broad strategy focuses on maximizing production cost and selling at a reduced price to a large market while a narrow strategy focuses on a small market but manufacture its products more unique and expensive with the intention of transferring the extra cost to customers.
Provide an example of an organization using a broad or narrow focus