Industry Analysis and Generic Competitive Strategies

Industry Analysis and Generic Competitive Strategies

Professor Michael Porter suggests that strategy formulation requires an analysis of the attractiveness of an industry and the company’s position within that industry. This analysis becomes the basis for formulating generic strategies.

Industry Analysis

In the analysis of the industry, Porter identified five forces: 1) the competition among companies (21 the threat of new companies entering the market. (3) the possibility of using substitute products or services, (4) the bargaining power of suppliers, and) 5 the bargaining porter of buyers or customers. On the basis of the industry analysis, a company may adopt generic strategies. These strategies are generic because they may be suitable on a broad level for different kind’s o organizations. Ark’ enterprise, however, may use more, than one strategy

Overall Cost Leadership Strategy

This strategic approach aims at reduction in costs, based to a great extent on experience. Thus, the emphasis ma)’ be on keeping a close watch on costs in areas such as research and development:, operation, sales, and service. The objective is for a company to have a low-cost structure compared with its competitors. This strategy often requires a large relative market share and cost-efficient