Chapter five describes the five generic strategies originated by Michael Porter in 1980. Very few businesses pursue a single strategy, most use some combination, i.e. low-cost and differentiation. Write about the various strategies that are used in the wholesale industry. What primary strategies are they using and how has their success been?
One thing that this case portrays nicely is the evolution of the industry that may be reaching a mature stage. As industries evolve, successful strategies must evolve as well. How do you think the industry's maturation is affecting the various strategies employed? What strategic changes might likely be necessary as the industry continues to mature?
One of the primary strategies that is used by many different organizations within the wholesale industry, is a cost leadership strategy, due to the fact that this strategy helps to ensure that a wholesale organization can remain competitive within this extremely lucrative and innovative market. The cost leadership strategy is the methodology by which organizations within the wholesale industry seek to keep their prices much lower than those of their competitors, which will helps to ensure that they keep their present customers, as well as attract a new customer base in order to increase the profitability of the organization. In the implementation of the cost leadership strategy, most organizations within the wholesale industry conduct a thorough analysis of the overall prices within the industry, and carefully compare their prices with those of their competitors, in order to ascertain which organization has the advantage in this strategic area. Once a thorough analysis of the situation has been conducted, then these organizations tend to engage in intense efforts in which to reduce the cost of their products as much as possible, without eliminating the profitability of the organization. Cost-cutting is a very exact science, and it will take a great deal of mathematical analysis and statistical computations in order to ensure that the cost reduction in the products, still provides the organization with a means by which to obtain a good profit. In essence, the sales that are produced ...