PORTER'S GENERIC

STRATEGY
STRETEGIC BUSINESS ANALYSIS
Audrey Camille Ardales
Jeralden Canas
Julie Ann Espiritu
Dianne Joy Magdaluyo
Marianne Penonia
HISTORY and

EVOLUTION

Reporter: Dianne Joy Magdaluyo

Porters Generic

Strategy
They were first set out by

Michael Porter in 1985 in his

book, "Competitive Advantage:

Creating and Sustaining

Superior Performance."
MICHAEL PORTER
(May 23, 1947)

A Bishop William Lawrence University

Professor at Harvard Business School

and the director of the school’s Institute

for Strategy and Competitiveness

Founder of the modern strategy field

and one of the world’s most influential

thinkers on management and

competitiveness
Porters Generic

Strategy
The Generic Strategies can be used to
determine the direction (strategy) of your
organisation.

A company must choose a clear course in

order to be able to beat the competition.
 Porter's Generic Strategy

COMPONENTS
Reporter: Julie Ann Espiritu
COMPONENTS OF PORTER'S
GENERIC STRATEGY
Competitive Advantage
Low cost Differentiation
Competitive Scope
Broad

Cost
Differentiation
Leadership
Narrow

Focus
COST
LEADERSHIP
"Increase profit without
Increasing profits by reducing spending more money"
costs, while charging industry-
average prices.
Increasing market share by
charging lower prices, while
still making a reasonable
profit on each sale because
you've reduced costs.
Reporter: Julie Ann Espiritu
 DIFFERENTIATION
"Finding something that is Differentiation involves making your
special or different than products or services different from
the competitors" and more attractive than those of
your competitors.

Selects one or more attributes that

many buyers in an industry perceive
as important, and uniquely positions
itself to meet those needs
Reporter: Julie Ann Espiritu
FOCUS
The idea is to focus on a specific
"Rests on the choice of a
market segment, either to offer narrow competitive scope
excellent quality or distinctiveness to within an industry"
the customer or lower costs than any
competitors can match.

This strategy drives organizations to

focus on a very selective target
market and offer them unmatched
value
Reporter: Julie Ann Espiritu
 2 TYPES OF FOCUS STRATEGY

It target niche or narrow markets and

1) COST FOCUS
offers the lowest possible price.

It target niche or narrow markets where

2) DIFFERENTIATION it is much easier to target and respond
FOCUS to specific customer needs.

Reporter: Jeralden Canas

PORTER'S GENERIC STRATEGY
Competitive Advantage
Low cost Differentiation
Competitive Scope
Broad

Cost
Differentiation
Leadership
Narrow

Differentiaiton
Cost Focus
Focus
STUCK IN THE MIDDLE
Competitive Advantage
Low cost Differentiation
Competitive Scope
Broad

Cost
Differentiation
Leadership

"Stuck in the Middle"

Narrow

Differentiaiton
Cost Focus
Focus
 STUCK IN
THE MIDDLE "The firm failing develop it's
strategy , in at least one of the
Competitive Advantage
three directions - a firm that is
Low cost Differentiation 'stuck in the middle' - is an
extremely poor strategic
Competitive Scope
Broad

Cost
Differentiation
Leadership
situation."
"Stuck in the Middle"
Narrow

Cost Focus
Differentiaiton
Focus
-Michael Porter
PURPOSE OF PORTER`S GENERIC STRATEGY

The purpose of Porter`s Generic

Strategy is to have a competitive
advantage. Develop an edge that would
help you get sales and take the lead
against your competitors.
 Porter's Generic Strategy

ADVANTAGES
Reporter: Audrey Camille Ardales
Porter's Generic Strategy

ADVANTAGES

Porter's generic strategies showed that

1 differentation is effective as a strategy as
cost leadership.
Porter's Generic Strategy

ADVANTAGES

No best strategy exists. Choosing a strategic

2 position depends on time and circumstance.
Porter's Generic Strategy

ADVANTAGES

The methods of Porter's can create entry

3 barriers in some extent.
Porter's Generic Strategy

ADVANTAGES

It prevents "stuck in the middle" situation.

4 Porter's strategy will focus on either one
according to its strength.
 Porter's Generic Strategy

DISADVANTAGES
Reporter: Marianne Penonia
Porter's Generic Strategy

DISADVANTAGES

Porter stressed the importance of choosing

1 one generic strategy however it should not
be treated as absolutes.
Porter's Generic Strategy

DISADVANTAGES

It can be too limiting due to lack of specificity

2 so this method may be inapplicable to real-
world situations.
Porter's Generic Strategy

DISADVANTAGES

3
Too hard for small corporation or firms to
choose the strategy.
Porter's Generic Strategy

DISADVANTAGES

The model makes no recommendations

4 about which strategy in the individual
industry is the better choice.
Porter's Generic Strategy

DISADVANTAGES

It ignores the effect of organizational culture

5 and the interaction of competitive forces.
"Strategy is thinking about a choice
and choosing to stick with your
thinking."

-Jeroen de Flander
THANK YOU!