📘 Porter’s Generic Competitive Strategies

Michael Porter, a renowned professor at Harvard Business School, introduced the General Competitive Strategies in his 1985 book Competitive Advantage.

These strategies help businesses gain a competitive edge in the marketplace and focus on how a company can create and sustain competitive advantage.

📊 Key Dimensions of Strategy

Porter’s Generic Strategies are based on two key dimensions:

1. 🎯 Scope of the Market:

   • 🌍 Broad (industry-wide)

   • 🎯 Narrow (focused/niche)

2. 🧩 Source of Competitive Advantage:

   • 💰 Cost (lower cost)

   • 🌟 Differentiation (unique offering)

🔷 The Four Generic Strategies

By combining these dimensions, we get four strategic segments:

🔹 1. Cost Leadership

(Broad Scope + Cost Advantage)

• 🎯 Goal: Become the lowest-cost producer in a broad market.

• ⚙️ How: Streamlined operations, economies of scale, tight cost control.

• 📈 Outcome: Ability to underprice competitors or maintain average prices with higher margins.

• 🛒 Example: Walmart — offers low prices to a wide customer base.

🔹 2. Differentiation Leadership

(Broad Scope + Differentiation Advantage)

• 🎯 Goal: Offer unique products/services across a broad market.

• 💡 How: Superior quality, innovation, brand image, or customer service.

• 💵 Outcome: Charge premium prices due to perceived added value.

• 🍏 Example: Apple — broad appeal with uniquely designed, high-quality tech products.

🔹 3. Focused Cost Leaders

(Narrow Scope + Cost Advantage)

• 🎯 Goal: Be the lowest-cost provider in a niche market.

• ⚙️ How: Specialized cost efficiencies tailored to a specific segment.

• 📉 Outcome: Serve a small group better or cheaper than broader competitors.

• 🇮🇳 Example: DMart — low-cost retail targeting price-sensitive Indian consumers.

🔹 4. Focused differentiators

(Narrow Scope + Differentiation Advantage)

• 🎯 Goal: Offer highly specialized, differentiated products to a niche market.

• 🧠 How: Deep understanding of unique customer needs in a narrow segment.

• 🔒 Outcome: Strong brand loyalty and premium pricing in that niche.

• ⌚ Example: Rolex — luxury watches targeting high-end consumers.

📋 Summary Table: