We respect your privacy. Critical analysis done separately for cost leadership strategy and differentiation strategy identifies elementary value in both strategies in creating and sustaining a competitive advantage. Companies can look at their value chain to determine where they can find opportunities introduce differentiation: Focus strategies concentrate on niche markets. Its global growth story is a testimony of its use of generic and intensive strategies. Differentiation, on the other hand, corresponds to the luxury providers, like Rolls Royce or Ferrari or Gucci, Armani or Prada. Coca Cola has manged its place through some critical factors which are a  source of sustainable competitive advantage for it. These approaches mean fixed costs are spread over a larger number of units of the product or service, resulting in a lower unit cost, i.e. It is the leading brand in the beverages industry and this position has been achieved with the help of a  sustainable competitive advantage. In service industries, this may mean for example a restaurant that turns tables around very quickly, or an airline that turns around flights very fast. selection. He was also voted No. [1], Porter wrote in 1980 that strategy targets either cost leadership, differentiation, or focus. Intensive growth strategies: A closer examination. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. This secondary generic strategy involves developing the business and its products to make them distinct from competitors. This requires all resources such as good human power, finance, accounting, marketing, R&D, productions, distributions, logistics and so on. Such companies are bound to become low-profitable, second-rate companies due to ambiguous corporate culture, conflicting organizational structures and contradictory and ineffective incentive schemes. Based on its generic strategy of cost leadership, McDonald’s supports this intensive growth strategy by using low prices to compete in new markets. Promotional strategy often involves trying to make a virtue out of low cost product features. The least profitable firms were those with moderate market share. Now, there are 21 billion dollar brands in its portfolio. Market Development. Vertical integration is a strategic objective linked to McDonald’s cost-leadership generic strategy. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. When you use one of Porter’s Generic Strategies to gain advantage in the marketplace, these five industry forces will likely change based on your selection of one of the strategies. As a low-cost provider, McDonald’s offers products that are relatively cheaper compared to competitors like Arby’s. Overheads are kept low by paying low wages, locating premises in low rent areas, establishing a cost-conscious culture, etc. For example, PepsiCo acquired Quaker Oats in 2000, South Beach Beverage Company in 2000 and Tropicana products in 1998 (DiPali, 2012). This method could save delivery costs for both producers and customers. Porter's Generic Strategies Designed by Michael Porter in 1979 ... Usually companies using this strategy have a reduced size, focus all their resources and efforts on a narrow and well defined segment of market, and have the advantage of a high degree of customer loyalty. Increase market share by lowering prices; Perform value chain activities in a more cost-effective manner than your competitors; Review your value chain to eliminate unnecessary (wasteful) activities. A strategic objective for this intensive growth strategy is to establish new locations in new markets, such as new McDonald’s restaurants in African or Middle Eastern countries where the company currently has no operations. However, market development is now a secondary intensive growth strategy because McDonald’s already has restaurants in most regions around the world, except Mongolia, some parts of the Middle East and west Asia, and the majority of African countries. The strategic objective for this intensive growth strategy is to capture more consumers by attracting them to new products. Empirical research on the profit impact of marketing strategy indicated that firms with a high market share were often quite profitable, but so were many firms with low market share. Retrieved on May 16th 2012 from http://www.slideshare.net/dipalij07/porters-generic-strategies-with-examples, Eldring, J. This is the strategy of selling more to the existing  customer base. Maruthi has actually likewise been a company that has pursued sustainable development with their “3 R” framework standing for “decrease, recycle, recycle” in its plants, so that there is a minimal tension on resources emphasizing on low expense while maintaining their promise to the consumer. [5] This point is critical. It is attempting to differentiate itself along these dimensions favorably relative to its competition. McDonald’s uses product development as its tertiary or supporting intensive strategy for growth. Gargasas, A., & Mugiene, I. Coca Cola has manged its place through some critical factors which are a of. Mcdonald ’ s offers products that are relatively cheaper compared to competitors like Arby ’ offers. Niche markets involves developing the business and its products to make a virtue out of low cost features... Itself along these dimensions favorably relative to its competition strategy involves developing the and! 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