Generic strategies are is concept used to explain the situation when the company obtains competitive advantage compared to other companies in the entire market. We have for kinds of generic strategies. These include lower cost, differentiated, or focus, (Porter, 1980). Any company chooses to articulate either of the two strategies of competitive advantage thus being able to operate either at lower cost or by differentiating, where customers dictate the rise in prices.
According to Chris Coleridge, in a certain workshop on Entrepreneurial foundations, he talked about different things but the most topics that attracted the most people attentions was about ‘Choosing your Route for Success’. He explained that if you in a market with many competitors, one can either choose to offer low prices, or even differentiate his or her goods by improving the quality of the goods thus attracting a lot of customer compared to other sellers in highly competitive market, (Miller, 1992.
He stated that the cost leader in any given market will only make money compared with other cost takers. All this concepts are focused along to rise the profit margin in which the company operates. However, the differentiator on the other hand focuses on improving the quality, by either increasing the choice, adding its value, or even increasing the feature in the company’s goods and service. Any company that is competing with a company that is both differentiator and cost leader at the same time will end up getting a lot of problem because it is challenged in both sides (Kiechel, 2010).
Citing live example, in UK there is certain fashion industry which has two competitors like Primark and Selfridge. Primark brags to be cost leader and focuses on selling the clothes, though not pleasant, at the lowest cost of up to 3$ dollars. Selfridge on the other hand sells its goods at high prices though its goods are pleasant and prestigious. Both of these companies operate at profit because each has identified particular generic strategy to sell the product at. On the other end, we have other company like Debenhams which operates within the two companies generics strategies. Some of its goods are of value but not like those of Selfridge and others of lower prices though not to extent of those of Primark Company. This company is undergoing a lot of challenge because of the high competitive advantage of the two other companies.
References.
Porter, M.E (1980), “Competitive Strategic Techniques for the analyzing industries and competitors”. New York.
Miller D, (1992), “the generic strategy trap”, in the journal of Business Strategy 13(1).
Kiechel, Walter (2010). The Lord of Strategy. Harvard Business press.