Question

Which of the Generic Strategies for Creating a Competitive Advantage do you feel is best, and why? Please provide examples or other evidence

Answer 1

There are four generic strategies for competitive advantage. The strategies are defined based on a source of competitive advantage and market of the competition. According to Porter, the organizations can either be cost leader or differentiator. If the organization focuses on a narrow market, it is called cost focus and differentiation focus.

In my opinion, cost leadership is the best strategy for creating a competitive advantage. Cost leadership is the strategy where organizations strive to achieve the lowest possible cost to produce products or deliver services. When an organization pursues a cost leadership strategy, the firm attempts to identify the ways to reduce costs through operational effectiveness. Such operational effectiveness results in the optimal use of scarce resources and cost savings. Optimum use of resources saves resources for future generations. For instance, companies that reduce different types of waste ultimately want to reduce costs and save resources. For instance, Toyota implemented the system of reducing waste in the production system saved different limited mineral resources such as iron.

Moreover, cost leadership strategy encourages the organizations to innovate processes. For instance, to achieve the lowest possible process for the products in the supermarket, Walmart uses a vendor managed inventory systems. In this system, the suppliers are responsible to track the inventory in Walmart stores and supply the adequate number of products. Due to vendor managed inventory, different technology companies have developed software to track inventory and facilitate suppliers and stores.

Apart from that, I feel each organization directly or indirectly follow cost leadership strategy. For instance, Apple designs the products in the USA, but assembling of the products is done by different suppliers around the world. The reason for such network of suppliers is cost reduction.

Hope the answer will help. Thank you.