Question

You will choose two company and will explain which Porter strategy these two companies are using

Answer 1

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STARBUCKS:

Any business should be able to compete in the increasingly competitive environment of the 21st century with a sustained competitive advantage. The only companies with a consistent competitive edge hold the leading position such as Apple, Google, Microsoft, Starbucks etc. Three specific methods – cost management, differentiation and market advantage – have been identified by Porter. The expenditures and distinctions are two common techniques.

There can be some strategic advantages for businesses. A company may rely on technology to reduce manufacturing costs and then pass that on to its clients. The production of a new product or service will be dependent on other businesses for market share. The sector has many examples of companies using strategies which have established sustainable competitive advantages. Below is a analysis of popular and extreme methods used by Starbucks to gain competitive advantage and through market share.

Differentiation for competitive advantage

The Starbucks approach is known as the technique of differentiation. There are several ways to do it, because distinction can be based on many factors. This can differ between product and product, operation, business and sector. Price, reliability, accessibility and customer service and the brand's identity are the primary pillar of differentiation in various instances. In terms of price, Starbucks has made a distinction between its goods and its customers. This has developed a distinct brand identity, which also provides the basis for distinguishing and allows it to market the products better than its rivals.

Quality based differentiation at Starbucks

For Starbucks, consistency is the primary basis of differentiation. The only way to charge a premium price is for the coffee lovers to make high quality coffee. The consistency of its coffee beans has been the highest standards. At every step Starbucks goes to great lengths to ensure that its beans meet the highest quality standards.

The beans of Arabica are different from those that are standard. Arabica has an excellent taste at higher altitudes, where the beans are denser. These denser beans have a deeper and more complex taste in any Starbucks cup. The quality story does not however end in the acquisition of high quality beans. It's moving farther forward. There is a major gap in preparedness. Starbucks roasts its coffee deeper to bring out the flavor.

The remainder of the loan goes to his professional baristas. Some people may even call it the obsession of Starbucks, but the brand's coffee really is cool. It only selects coffee cherries that are red and mature and suitable for selecting. The color, the size and the density are then sorted repeatedly. Cups of coffee are tasted from every batch at least thrice before approval.

This is how Starbucks achieves the consistency every client expects. This fixation is now required to deliver superior taste and satisfaction. As Starbucks is ready to make exceptionally good coffee in any range, its price is hardly matched by its rivals. This provides a competitive edge that indicates a higher market share and stronger profits and revenue.

Ethical and customer friendly brand image

However, while product quality can be an essential basis for differentiation, it must also be assisted by its brand identity. Starbucks has built a distinct ethical picture of company that focuses both internally and externally on ethics. Starbucks created a superior experience for its customers, besides an picture of an ethical company. The customer service is also known for its great friendliness.

In terms of publicity, the picture of a customer-friendship company, which ethically supplies 99 per cent of its bodies. Starbucks has shown the economic value of a better customer service. It now has over 22,500 companies worldwide. These stores deliver a comfortable environment that lets customers lose the tension of their days. The warm and friendly environment in these stores is also a big driver for sales and revenue. In these stores, smiling baristas are more than willing to share their experience with their customers.

Starbucks focuses on responsible sourcing to build an ethical picture and to support farmers and the environment through their CSR strategy. It says that its 99% coffee is ethically made. It has supported coffee growers. They also invested. Starbucks is as strict internally as the supply chain when it comes to ethics and conformity. In general, an ethical brand's reputation makes its consumers even more love it. Brand identity is very relevant today and if the identity is harmed, profits and revenues will decline directly. A good brand image can thus provide a lasting competitive advantage, as with Starbucks

Intensive Strategies used by Starbucks:

Market Penetration:

This approach allows sales to increase and therefore profits from existing markets to increase. Generally, more emphasis is put on marketing campaigns to raise established goods and services 'market share. Starbucks 'marketing budget has historically been very small. The company used its high quality goods and exceptional customer service primarily for marketing itself.

But things have changed over time and Starbucks has increased its marketing costs. The company aggressively promotes itself and its goods from its own website to other platforms, such as social media. This helps to draw new clients and to overcome the competition. It is also one of Starbucks 'most intensive tactics for the growth of its market share.

Market Development:

For businesses that perform very well and who have very good results on their present markets, business growth is an important choice. It includes the launch in new geographical areas of existing goods and services.

In 1996, Starbucks expansion began the first store in Japan outside North America. It first launched goods in the Asia-Pacific region in nine countries including the Philippines, Singapore, South Korea and Thailand, Australia, Indonesia, Malaysia, New Zealand. His presence in the area has increased significantly since then. It is expected to double its number in China by 2021 with more than 2,500 shops. In India too, a collaboration with Tata has broken ground.

Product Development:

The business also focuses on the production of new goods in addition to the two intensive approaches described above. Starbucks has continued to innovate its products as an innovative company. Over the years, new flavors and variations have continued to be introduced. It invests heavily in R&D and also in raw material sourcing.

Tesla, Inc.

To gain a strategic edge over another company in the global automotive industry, Tesla, Inc. (formerly Tesla Motors, Inc.) applies their conventional strategy. The company's approach to investing in the market reflects a conventional business strategy in Michael Porter's model. This conventional market study of Tesla illustrates the company's emphasis on using new technologies in its electric cars and related goods as a way to battle General Motors Company, the Toyota Motor Corporation, the Honda Motor Company, the Nissan Motor Company, the Bavarian Motor Work (BMW).

Apart from the traditional strategic approach, a organization uses complex market development approaches. This study shows that the intense growth strategies of Tesla Inc. have been evolving gradually. These innovations reflect the growing success and competitiveness of the company as well as the market strengths found in Tesla Inc's SWOT study. In view of technical change and rising consumer desires, structural changes ensure the companies 'stability over time.

The standardized approach of Tesla (Porter's model) helps the company to stay competitive and draw early adopters in the global automotive industry. This intense approach promotes business growth focused on rising revenue from today's markets in which Tesla, Inc. operates. The combination of intense growth strategies and standardized pricing strategies leads to the operating efficiency of the organization.

Tesla’s Generic Strategy (Porter’s Model)

The broad distinction is Tesla's general strategic strategy. This general strategy builds on the competitive advantage of creating products which differentiate the business from other companies in the industry. For example, the products of Tesla Inc are attractive because they provide advanced technology that respects the climate, despite the fact that the vast majority of cars today use internal combustion engines.

By using this standardized business approach, the company retains all future customers who are increasingly interested in goods that value the environment. Tesla originally used differentiation as his standardized competitive advantage tactic. The company has stressed the uniqueness of its products in applying the differentiation based strategy and has primarily concentrated on early adopted persons on the high-end electric vehicle market.

These early adopted individuals are wealthy consumers who continue to buy new goods. But now that Tesla's generic pricing strategy has already been established and the cost of production has declined to large degree. The declining costs of production and increased brand awareness allow the business to target its customers widely in the automotive industry.

To maintain a competitive advantage, the conventional Tesla, Inc. approach needs acceptable strategic goals. One of the company's strategic priorities, for example, is to increase research and development (R&D) investments to develop new technologies to meet demand in the market for advanced renewable energy solutions, such as batteries for different applications. Another strategic goal linked to Tesla's general strategy of competitiveness is to improve competitiveness by increasing its business potential to generate more brand awareness and sales.

Tesla’s Intensive Strategies (Intensive Growth Strategies)

Market Penetration (Primary Strategy).

As its new primary intensive growth plan, Tesla, Inc. uses market penetration. This intensive approach helps company growth by increasing current markets 'sales revenues. For example, the company plans to introduce and sell more of its electric cars in the U.S. through aggressive marketing. This maximizes the company's turnover from the markets it operates today. This intensive growth strategy relates to the generic strategy of Tesla through the creation of a competitive advantage that relies on increased market share. The intense strategy-based corporate goal is to increase client revenues through aggressive marketing.

Product Development (Secondary Strategy).

The secondary intensive growth strategy of Tesla Inc. is product production. The company has created new goods that produce new revenue in this intensive strategy. This technique is implemented by designing new goods with reduced environmental effect with advanced technology. For example, Tesla Roadster was the first fully-electric sports car in the globe to offer solar panels and produced.

This concentrated approach supports the conventional marketing strategy of Tesla Inc. by concentrating on innovative vehicles with high technology and associated goods that cater to target consumers. In connection with this aggressive growth plan the strategic aim is to continue to invest heavily in R&D.

Market Development.

As a tertiary intensive growth strategy, Teslas, Inc. uses business creation. To order to produce more revenue and expand the global economy, this strategy requires new markets. For instance, by constructing new offices and facilities, the company slowly extends its market scope worldwide. The business actually operates in just a few countries but is intended to expand globally further. This strengthened approach supports the mission and vision statements of Tesla, which underline international leadership in the automotive sector, with transport energy solutions and other industries.

The generic differentiating strategy allows the expansion of the market through the production of innovative goods, which attract buyers in new markets. The strategic goal of the market-intensive growth plan is to expand the multinational company of Tesla Inc. by establishing alliances with other companies to make new markets easier to reach.

Diversification

Yet Tesla is only a minimally significant strategy for intensive production. This intensive strategy allows the business to expand through the development of new businesses. For instance, the company aims to develop new battery technologies for a wide variety of non-auto applications. This powerful growth plan has however little effect on the financial results of the company at this time.

In order to expand its automotive and energy technology businesses, we concentrate much of our research on market penetration and product growth. By pursuing this intense growth approach, the organization will use its traditional competitive differentiation approach to improve the potential for success. A strategic goal of diversification is to increase Tesla's research and development investments in order to find new market opportunities. Another strategic goal of that intensive strategy is the acquisition of other companies or the development of new products in a joint venture.

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