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Generic Strategies

The five generic strategies were formulated by Michael Porter in 1980. His book "Competitive Strategy" is widely seen as the founding publication of business strategy. Most of what we treat as having significance in the field can be traced to one of Porter's publications.

Reflect on our experiences with these generic strategies. Think about how they are applied in our businesses. In particular I'd like to discuss successes and failures. What worked well and what didn't? What were the circumstances surrounding these experiences? Our goal is to develop some sense of the conditions under which each of the generic strategies might be successful or would likely fail.

Generic Strategies
The five generic strategies were formulated by Michael Porter in 1980. His book "Competitive Strategy" is widely seen as the founding publication of business strategy. Most of what we treat as having significance in the field can be traced to one of Porter's publications.

Reflect on our experiences with these generic strategies. Think about how they are applied in our businesses. In particular I'd like to discuss successes and failures. What worked well and what didn't? What were the circumstances surrounding these experiences? Our goal is to develop some sense of the conditions under which each of the generic strategies might be successful or would likely fail.
You will address the strategies in two separate discussions. Be sure to address each of the separate strategies listed:
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Strategy 1: Best-Cost Provider
Definition: Giving customers more value for their money by incorporating good-to-excellent product attributes at a lower cost than rivals; the target is to have the lowest (best) costs and prices compared to rivals offering products with comparable attributes.
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Strategy 2: Focused Differentiation Strategy
Definition: Concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals' products.

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Best-Cost Provider Strategy

The best-cost provider strategy emphasizes low cost combined with differentiation. The idea behind this strategy is to provide a high-end product at a lower cost than rivals and deliver a value proposition that exceeds customer expectations (Hoey, 2012). Through this strategy the company aims to be a low cost provider which provides a price which is lowest as compared to competitors but provides product which is better than their products.
The competitive advantage of best-cost provider strategy is to match service expectations of rivals at a lower price.

The risk of this strategy is that the company gets pressurized by competitors who provide low cost products and also by competitors who provide high-end differentiated products. Success from this strategy hangs from a very fine thread which can break with any mistake.

One example of best-cost strategy is Toyota Lexus. Customers consider Lexus to be luxury car and when they buy the car they consider that image of the car is very good; something which they identify with. It is a differentiated product for them. The Lexus is in the midrange of prices for cars. Since there is a price ceiling and features provided by Lexus help it differentiate from other cars, it is difficult to maintain the position of differentiation. It can squeeze out profits from the company due ...

Solution Summary

The document provides information related to best-cost provider and focused differentiation strategies along with examples.

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