Briefly describe the three generic strategies—overall cost leadership, differentiation, and focus. Explain the relationship between the three...

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General Management

Briefly describe the three generic strategies—overall costleadership, differentiation, and focus.
Explain the relationship between the three generic strategiesand the five forces that determine the average profitability withinan industry.

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Answer1 Generic Strategies are set out by Michael Porter in 1985 in his book Competitive Advantage Creating and Sustaining Superior Performance They are known as generic strategies because they can be applied to products or services in all industries and organisations of all sizes Generic strategies have been developed so that a companies could use it to gain competitive advantage over others Three generic strategies developed by Michael Porter are 1 Cost Leadership 2 Differentiation 3 Focus Cost Leadership Cost leadership strategy as the name signifies involves being the leader of your industry or market in terms of cost It focuses on achieving scale economies and utilising them to produce high volume at low cost Profits may be narrower but quantity is larger generating high revenues Cost leadership is all about minimising the cost to the organisation of delivering products and services but being Low cost producer is not enough as there may be chances of high competition by other lowcost producers who may undercut your prices and therefore block your attempts to increase their market share Companies that have successfully achieved cost leadership have Access to the capital needed to invest in technology that will bring cost down Very efficient logistics A low cost labor low cost material lowcost facilities and a way of See Answer

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