Competitive strategy is about being different.

It means deliberately choosing to perform

activities differently or to perform activities than rivals to deliver a unique mix of value.
Micheal E. Porter. Many authors have studied, researched, and wrote about competitive
advantage but Micheal E. Porters three of the most widely read books on competitive analysis
namely Competitive Analysis, Competitive Advantage, and Competitive Advantage of Nations.
Those books greatly influenced the business and corporate arena where they employ most of the
well-researched contents and information that are in those books.

The books of Micheal E. Porter talk mostly about on how to outperform competitors and
tackle topics on strategy crafting and execution of those strategy to win in the industry and gain
competitive advantage. Porter developed generic strategies that can be used singly or in
combination to create a strong defense against competitors and to outdone most of the
competitors activities, whether they are within the industry or across the nation. The strategy is
generic because they can be applied to a large variety of situations and contexts. The generic
strategy could help businesses in different industries to knock off rivals to deliver more value to
customers and do a better job of satisfying them. In every business and company, the aim is just
simply to significantly do a better job than rivals in order to win customer favor therefore
securing a better place in the market. By providing what buyers are looking for at a higher value
than the competitors, you are building a barrier that puts your business in a safer position than
your competitors.

Micheal E. Porters five generic strategy that I am talking about are the Low-Cost
Provider Strategy, Broad Differentiation Strategy, Best-Cost Provider Strategy, Focused (or
Market Niche) Strategy Based on Low Costs, and Focused (or Market Niche) Strategy Based on
Differentiation. Each of these five different generic strategy stakes out different market position.
Each involves different and distinct approaches in competing and operating the business. These
five generic strategy boils down to whether the company is pursuing to a competitive advantage
linked to low costs or product differentiation or whether the companys target market is broad or
narrow. Managers in every company always have a different take and spin on future market
conditions which is based on research and market forecasting then give methods on how to best
align their companys strategy to the situation. But no matter how diverse the companies
strategies are the core of their strategies are the five generic strategy by Porter.

One of the five generic strategy is the Low-Cost Provider Strategy wherein the company
is striving to achieve lower overall costs than rivals and appealing to a broad spectrum of
customers, usually by underpricing rivals. This strategy is very common in most of the
businesses, especially here in our country. The top most consideration of buyers when purchasing
a product is the price, which is why companies and businesses often based their strategies on
how to lower down the prices of their products. Most companies and businesses that use this
strategy are those that are entering the market or has a new product that they are introducing in

the current market segment or in the new market segment that they are going to enter. This is the
most effective strategy and powerful approach in markets with many price-sensitive buyers.
However, a company wont succeed to achieve low-cost leadership if they are just one of the
many comparative low-cost providers. In order to succeed with this strategy, the company should
be recognized as the lowest-cost provider in that market segment, an example of a low-cost
provider who succeeded in positioning their company as such is the Cherry Mobile. In which
they successfully positioned themselves as a low cost provider of smartphones for the price
sensitive markets, which is generally present in our country. Companies and businesses also have
to be careful with this approach because a company with a product offering that is too frills-free
sabotages the attractiveness of the companys product and turn the buyers off even they are
priced lower than the competing products. To avoid this, managers must find the overall balance
between the price and the quality of the product low price by itself, is not always appealing to
buyers. They must include features and services that buyers consider essential. Finally, to
maximize the effectiveness of this strategy, companies need to achieve their cost advantage in
ways that are difficult to copy or match.

The second strategy is the Broad Differentiation Strategy which seeks to differentiate the
companys product offering form rivals in ways that will appeal to a broad spectrum of buyers.
The essence of this strategy is to be unique in ways that are valuable to a wide range of
customers. This strategy is for companies whose market has varying needs and preferences that
are too diverse to be fully satisfied by common sellers with the same capabilities and offers
identical features and experience in providing their products or services. These market segments
are difficult to satisfy, so companies that are attempting to succeed with this approach must study
the buyers need and behavior carefully to know and learn what these buyers consider important
and essential, what they think has value and what they are willing to pay for. In differentiation
companys must combine, explore and include different attributes into their product or service
offering that will give the customers a meaningful different experience that would set them apart
from the competitors. A success in broad differentiation strategy allows a firm to command a
premium price for its product and services, it may increase sales because attracting new buyers
by the differentiating features of the offerings, and/or may gain customer loyalty to the brand
because of the strong attraction to the differentiating features of its products or services. One
example that had a great success with this strategy is the Apple Company, in which they always
offer new and different features on their products that customers and Apple fans (as what
others call them) love and always anticipating every time the company unveils new products.
Successful differentiation enhances profitability whenever the extra price the product commands
outweighs the costs of the achieving differentiation. It is not always a success in employing this
strategy. This strategy often fails when it is not crafted carefully. The pitfall of this strategy is its
sustainability. In order for this strategy to work for a longer period of time the differentiation
must be difficult to copy. Easy-to-copy differentiating features cannot produce sustainable
competitive advantage. Managers must remember that differentiation based on competencies and
capabilities tend to be more sustainable. Any differentiating feature that works well is a magnet
for imitation.

The third strategy is the Best Cost Provider Strategy, in here, the company strives in
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. The objective here is to give the
most value for money to the customers. What I mean here by value for money is that the
customer must realize that the product or service is worth (more than worthy of) the price they
paid for. When a company delivers this successfully, they easily gain customer loyalty and repeat
purchase of their products or services. The competitive advantage of a best-cost provider is lower
costs than rivals in incorporating upscale attributes, putting the company in a position to
underprice rivals whose products have similar upscale attributes. Being a best-cost provider is
different from being a low-cost provider because the additional features and upscale attributes
entails additional costs but the company strives to lower the price despite of this, in short the
best-cost provider strategy is the middle ground between the low-cost provider and broad
differentiation strategy, therefore balancing a strategic emphasis on low cost against a strategic
emphasis on differentiation. The target of this approach are those value conscious customers
where they greatly consider the quality of the product and the price they pay for it. Example of
companies using this strategy are the electronics and computer company like Acer, Asus and
Lenovo. Their product offerings includes features of the high-end and premium computers but
still manages to keep their prices lower than their competitors like Apple and Samsung. These
computer companies are the best examples of this strategy because their markets buyer diversity
makes the product differentiation the norm and where many buyers are also sensitive to price and
value.

The fourth and fifth strategy are almost the same because they both have a narrow buyer
segment which means they are targeting a market niche. The fourth strategy is the Focused
Strategy Based on Low Costs, it concentrates on a narrow buyer segment and outcompeting
rivals by having lower costs than rivals and thus being able to serve niche members at a lower
price. The avenues to achieving a cost advantage over rivals also serving the target market niche
are the same as for low-cost leadership to outperform rivals in keeping the costs at a minimum.
The only real difference of the low-cost provider strategy and focused low-cost strategy is the
size of the buyer group that a company is trying to appeal to. The key in sustaining this strategy
is for the company to stay committed to serving the niche at lowest overall cost; dont blur the
firms image by entering into other market segments or adding other products to widen market
appeal.

The fifth strategy is the Focus Strategy Based on Differentiation that is 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. A focused strategy keyed to
differentiation aims at securing a competitive advantage with a product offering carefully
designed to appeal to the unique preference and needs of a narrow, well-defined group of buyers.
To sustain this strategy, the company must be consistent is serving the niche market better than

the rival that is through improving all aspects of the companys value chain in order to delight
customers.
Saint Paul School of Business and Law
Campetic, Palo, Leyte
A.Y. 2015-2016

SEMI FINAL REQUIREMENT

TYPES OF COMPETITIVE ADVANTAGE BEING

PURSUED
(Micheal E. Porters Five Generic Strategy)

Submitted By:

Jenssen Austin I. Uy

Submitted to:

Prof. Jasper V. Dulosa

BUSPOST 1:00 2:00 MWF