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Michael Porter’s Three Generic Strategies Essay

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Generic Strategies

There are several different frameworks used to analyze the strategies implemented by different organizations. However, the most popularly used framework is the one designed by Michael Porter, in which he has divided the generic strategies into three broad categories: low-cost producer, niche supplier, or differentiation strategy (Porter, 1980). Almost all the businesses can be divided into these three categories.

The three retail firms that I have chosen for the project are:

  1. Apple
  2. Dell
  3. Ties.

These three companies are totally different in terms of the strategy that they have adopted for the long run. Apple and Dell operate somewhat in the same industry; however, Apple has a totally differentiated strategy (Johnson, Scholes, & Whittington, 2009), whereas Dell is a low cost leader in the market, and well known for cutting the costs. The third company I have chosen is Ties.com, which is an online retail store that specializes only in men’s neckties, and has been operating since 1998.

Apple Inc.

Apple Inc. is one of the most popular brands in the world and it has certainly differentiated itself from the rest of the competition. The rivalry and competition in the industry is immense, and there is huge pressure for the companies to decrease prices and earn profits through volume, but Apple Inc. has been successful in differentiating itself from the rest of the companies. First of all, Apple Inc. uses a very unique and creative marketing and positioning approach, which is particularly designed to target the desired consumers. This marketing approach by Apple Inc. has been very successful, as it is one of the most well-known brands in the world.

Secondly, Apple Inc. never indulges into price wars, it has positioned itself as a premium brand that delivers finest value and for that it charges premium prices. These techniques have enabled Apple Inc. to differentiate from the rest of the companies.

Dell

On the other hand, has not positioned itself as a premium brand. Dell is a company that promises value for money. There are no frills attached with the product and thus there are no additional costs. To achieve this, Dell first of all, has developed a unique Just-In-Time inventory system, which minimizes the cost of inventory by a great extent, thus minimizing the manufacturing costs. Secondly, Dell spends significantly low on its marketing than Apple or other premium brands. This decreases the cost and thus Dell is able to charge lower prices to its desired customer segment.

Ties

Is a very unique shop, and it has only online presence and deals only in mean’s neckties. It caters to a niche target market, i.e. men who wear neckties and are willing to make the purchase online. One of the major techniques used by Ties.com is to have only an online presence. This greatly decreases the cost of running the business, and increases the potential geographic span. Since the target market is very small, cutting any extra costs is very important. Secondly, the company asserts the most comprehensive collection of ties (Hartman, 2011).

Yes, the tactics seem to be working for all these companies, because they are all well known for the exact same characteristic. Apple delivers the best quality and charges premium prices for it, Dell offers the best value for money, and Ties.com has one of the most complete collection of neckties available.

References

Hartman, D. (2011). Examples of Niche Retail Companies. New Jersey: Chron.

Johnson, M., Scholes, R., & Whittington, L. (2009). Exploring Corporate Strategy. New York: Prentice Hall.

Porter, M. (1980). Competitive Strategy. New York: Free Press.

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