In this essay the views of Porter that companies who engage in every generic strategy but fails to achieve any of them will be stuck in the middle and thereby possesses no competitive advantage (Porter. 1985) and Bowman’s and Ambrosini’s that despite Porters risks some firms have been successful by combining both strategies (1997) will be critically evaluated.
Before the critical analysis can begin, the main concept of Porter’s business-level strategy will be outlined briefly. According to Porter a firm can only be successful if it specializes in one out of two different options, which he considers to be opposites. The first is cost leadership where a company tries to be the lowest cost producer in its industry and the second is differentiation, …show more content…
(Jones & Butler. 1988) It means that differentiation heightens costs while cost leadership uses standardisation that reduces costs. This implies that cost leadership and differentiation are opposites of each other and being stuck in the middle gives a firm no competitive advantage according to Porter. Hambrick however argues that cost leadership and differentiation are not opposites of each other, due to the fact that competitors are able to excel at both strategies and that every type of generic strategy is a combination of efficiency, differentiation and scale. (Hambrick. 1983). The difference between cost leadership and differentiation should rather be described as a dimension of low cost vs high cost. Furthermore was Porters generic strategy criticised by Bowman and Ambrosini who argue that there is not only the possibility of being either a cost leader or a differentiator, but that there also is a possibility of being successful by using a hybrid strategy, which is a combination of the two. This is the case with Sainsbury’s. (Bowman & Ambrosini. 1997) This was proved by a survey, which 426 manager of 32 firms participated in and followed a normal distribution. The managers had to choose between …show more content…
For instance the study does not take the environmental circumstances in which the agreement about strategic strategies is positively or negatively related to performance into consideration. Also there was no attempt to control for the age or size of the companies, the environment or the nature of task complexity, which could have great influence on the agreement-performance link. Furthermore where the statements all derived from Porters generic strategy, but it could have been important to incorporate different perspectives and draw on the perceptions of managers to enhance the understanding of competitive strategy. (Dess & Davis. 1984) They also state that their research generally agrees with Porters statement that commitment to at least of Porters three generic strategies will result in higher performance, but that the firms should not pick a strategy that will put them in direct competition which a large number of companies engaging the same strategy. A possibility to avoid results heavily based on Porter could be to focus on general mission statements that focus on typical content like technology, strength, customer definition, social responsibility and philosophy. (David.
Before the critical analysis can begin, the main concept of Porter’s business-level strategy will be outlined briefly. According to Porter a firm can only be successful if it specializes in one out of two different options, which he considers to be opposites. The first is cost leadership where a company tries to be the lowest cost producer in its industry and the second is differentiation, …show more content…
(Jones & Butler. 1988) It means that differentiation heightens costs while cost leadership uses standardisation that reduces costs. This implies that cost leadership and differentiation are opposites of each other and being stuck in the middle gives a firm no competitive advantage according to Porter. Hambrick however argues that cost leadership and differentiation are not opposites of each other, due to the fact that competitors are able to excel at both strategies and that every type of generic strategy is a combination of efficiency, differentiation and scale. (Hambrick. 1983). The difference between cost leadership and differentiation should rather be described as a dimension of low cost vs high cost. Furthermore was Porters generic strategy criticised by Bowman and Ambrosini who argue that there is not only the possibility of being either a cost leader or a differentiator, but that there also is a possibility of being successful by using a hybrid strategy, which is a combination of the two. This is the case with Sainsbury’s. (Bowman & Ambrosini. 1997) This was proved by a survey, which 426 manager of 32 firms participated in and followed a normal distribution. The managers had to choose between …show more content…
For instance the study does not take the environmental circumstances in which the agreement about strategic strategies is positively or negatively related to performance into consideration. Also there was no attempt to control for the age or size of the companies, the environment or the nature of task complexity, which could have great influence on the agreement-performance link. Furthermore where the statements all derived from Porters generic strategy, but it could have been important to incorporate different perspectives and draw on the perceptions of managers to enhance the understanding of competitive strategy. (Dess & Davis. 1984) They also state that their research generally agrees with Porters statement that commitment to at least of Porters three generic strategies will result in higher performance, but that the firms should not pick a strategy that will put them in direct competition which a large number of companies engaging the same strategy. A possibility to avoid results heavily based on Porter could be to focus on general mission statements that focus on typical content like technology, strength, customer definition, social responsibility and philosophy. (David.