The generic strategy which is provided by Michael Porter is actually a framework which can be applied to strategies for individual business-level strategies. Porter has argued that the strengths of a company can be divided into two headings, namely, differentiation and cost advantage. When these two strengths are applied in broad and narrow scope, three results will come up, which are cost leadership, differentiation, and focus strategies. The table bellow illustrates Porter’s generic strategies. (Porter, 1998)
The following table illustrates how a firm can gain strategic advantage within strategic target. If a company is not succeeding in any of these three strategies it is actually stuck in the middle. (Arias, 2009)
Characteristics of the generic strategies can be compared in the circumstances of the Porter’s five forces which is illustrated by the below drawn table. (Porter, 1998)
Generic Strategies and Industry Forces
- Porter, M. E. (1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
- Arias, D. M. (2009, May). Analysis of Michael Porter’s Generic Strategies and its Usage in a Globalized Business Environment. Disertation To Obtain The Degree of Bachelor Honours in Business Administration . Montpellier, France: Universidad Del Rosario-Facultad De Administracion.