addition, one of the most important models used portfolio matrix of the Boston Consultancy Group.
The Porter and Treacy & Wiersma concepts( see the boxed text) both provide three strategies and are indifferent to which strategy you should choose. Their only guideline is that any choice has to be made with dedication. Pursuing two or three strategies at the same time will result in „ middle of the road ‟ offerings.
Porter Competitive Strategy
Porter 5 indicates that there are three successful generic strategies for achieving an above-average profit:
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Supplying a( standard) product at the lowest cost, in order to achieve the highest margin in relation to the market price. Porter calls this cost leadership. Supplying a product that deviates from the standard: this renders a direct price comparison impossible. Porter calls this the product differentiation strategy. Supplying a clearly delineated group of customers: the focus strategy. This enables you to meet the specific wishes of the customer group and to align your products and delivery accordingly.
Broad focus
Narrow focus
Lowest costs
Cost leadership
„ Stuck in the middle ‟
Focus strategy
Differentiation
Product differentiation
Figure 7. Porter ' s generic strategies for competitive advantage
Porter plots this in a spectrum, with the width of the customer focus on the vertical axis, and the choice between low costs and product differentiation on the horizontal axis( Figure 7). He argues that if a business fails to make a clear choice between one of the three options, it will be stuck in the middle. That makes sense, because if no choice has been made for a long while, implementing the options will take a lot of effort. To give a few examples: Ryanair pursues cost leadership, Rolex pursues product differentiation, and with the CL75 Poppy cell phone, BenQ Mobile aims at the trendy female, a typical focus strategy.
Treacy & Wiersema’ s Discipline of market leaders
In 1995, Michael Treacy and Fred Wiersema published the book " The discipline of market leaders " 6, subtitled " Choose your customers, narrow your focus, dominate your market ". The key message in their book is to choose a clear direction for your business, and to subsequently have the discipline to concentrate on just that direction.
Treacy & Wiersema, too, recognised three generic directions for a business to be successful, which are to some extent comparable to those of Porter:
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Operational excellence: supplying a product at the best possible total costs, also taking into account the efforts to be made by a customer. The latter is the addition compared to cost leadership. McDonalds is a good example: certainly not the cheapest supplier of
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