Competitive strategy: Strategies model by Michael Porter
- The strategic models' uses in strategic management
- Why models are so commonly used in strategic management?
- How models may contribute to the quality of decision-making from senior executives?
- Competitive strategy: Porter's generic strategies model
- The cost leadership
- The differentiation
- The focus
- Strengths of model
- Differentiation strategy strengths
- Focus strategy strengths
- Weaknesses of model
- Cost leadership strategy weaknesses
- Differentiation strategy weaknesses
- Focus strategy weaknesses
The strategy has taken a big place in the firm and it has become the only way to do business. Big companies have special staff to formulate strategies, whereas in the smaller firms it is the CEO and/or the Head Officer who takes and makes the strategic decisions. Some definitions are necessary to understand the complexity of the strategy. The strategic management is defined as ?the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives? (David, 1998). According F.R. David, the strategic management includes 3 different stages: the strategy formulation, the strategy implementation and the strategy evaluation. In addition, there exists a Strategic Management Model to guide the managers through their task. Conceptual models are most commonly used in strategic management. But what is the role of these models in strategic management? How do models contribute to decision-making? In the first part, we will try to answer these questions.
[...] It exists in numerous models in strategy such as PESTEL model, Product Cycle Life model, BCG matrix, five forces model or SWOT analysis, etc Each model has its own characteristics, own objectives and was created by different famous strategists or organization such as Professor Michael Porter or the Boston Consulting Group. Fred R. David argues ?every model represents some kind of process?. Why models are so commonly used in strategic management? The strategic management itself can be used as a model, we can ask them: why are there so many models in strategic management? [...]
[...] However even if Porter thought that these hypothesis are incompatible, that appeared compatible for those in the ?combination strategy school? who explained that the firm having a really good combination of both strategies created to a synergy which overcame all disadvantages. The sustainer's of this hypothesis based their arguments on two points: the first one was based on broad economic relationships and the second one was based on a demonstration in which individual firms will identify such relationships, unique to a small number of firms in an industry (Parnell, 2006). [...]
[...] Partridge & Perren explain in their article, that according to Faulkner and Bowman the leadership is almost invisible for the customer and so it cannot be used to win customers or gain competitive advantage; unless the cost leadership strategy is then followed by a price leadership strategy. As Parnell explains, the buyers see price and not costs and in order to achieve the sustainable competitive advantage the product or service must be perceived by customers as a better price than competitors' items or as equal to the competitors' items but cheaper or as better and cheaper. [...]