Corporate Strategy Sab Miller free essay sample

These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Strategic scope is a demand-side dimension (Michael E. Porter specialized in this strategy) and it looks at the size and composition of the market you intend to target. Strategic strength is a supply-side dimension and looks at the strength or core competency of the firm. In particular he identified two competencies that he felt were most important: product differentiation and product cost (efficiency).In his 1980 classic Competitive Strategy: Techniques for Analyzing Industries and Competitors, Porter simplifies the scheme by reducing it down to the three best strategies. They are cost leadership, differentiation, and market segmentation (or focus). Market segmentation is narrow in scope while both cost leadership and differentiation are relatively broad in market scope. 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. We will write a custom essay sample on Corporate Strategy Sab Miller or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The least profitable firms were those with moderate market share. This was sometimes referred to as the hole in the middle problem. Porter’s explanation of this is that firms with high market share were successful because they pursued a cost leadership strategy and firms with low market share were successful because they used market segmentation to focus on a small but profitable market niche. Firms in the middle were less profitable because they did not have a viable generic strategy. Porter suggested combining multiple strategies is successful in only one case.Combining a market segmentation strategy with a product differentiation strategy was seen as an effective way of matching a firm’s product strategy (supply side) to the characteristics of your target market segments (demand side). But combinations like cost leadership with product differentiation were seen as hard (but not impossible) to implement due to the potential for conflict between cost minimization and the additional cost of value-added differentiation, Porter (1980). Differentiate Strategy Differentiate the products in some way in order to compete successfully.Examples of the successful use of a differentiation strategy are Hero Honda, Asian Paints, HLL, Nike athletic shoes, Perstorp Bio Products, Apple Computer, and Mercedes-Benz automobiles, Porter (2008). A differentiation strategy is appropriate where the target customer segment is not price-sensitive, the market is competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy.These could include patents or other Intellectual Property (IP), unique technical expertise (e. g. Apples design skil ls or Pixars animation prowess), talented personnel (e. g. a sports teams star players or a brokerage firms star traders), or innovative processes. Successful brand management also results in perceived uniqueness even when the physical product is the same as competitors. This way, Chiquita was able to brand bananas, Starbucks could brand coffee, and Nike could brand sneakers. Fashion brands rely heavily on this form of image differentiation, Porter (2008).Variants on the Differentiation Strategy The shareholder value model holds that the timing of the use of specialized knowledge can create a differentiation advantage as long as the knowledge remains unique. This model suggests that customers buy products or services from an organization to have access to its unique knowledge. The advantage is static, rather than dynamic, because the purchase is a one-time event, Porter (2008). The unlimited resources model utilizes a large base of resources that allows an organization to outlast competitors by practicing a differentiation strategy.An organization with greater resources can manage risk and sustain profits more easily than one with fewer resources. This deep-pocket strategy provides a short-term advantage only. If a firm lacks the capacity for continual innovation, it will not sustain its competitive position over time, Porter (2008). The Toyota Prius It is unquestionable that alternative fuel vehicles are the future of global motoring. The urgency to protect our planet and its non renewable fuels grows and it is even more pressing; consumers are recognising the need to conserve what is left of our precious resources.