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SWOT Analysis

I. New investments:
A). New investment by toyota in factories in the us and china saw profits rise, against the
worldwide motor industry trend which was suffering heavy losses. Net profits
Rose 0.8% to 1.17 trillion yen ($11bn; 5.85bn), while sales were 7.3% higher at 18.55 trillion
B). Analysis : the company had the right mix of products for the markets that it served.
usa believes in living life king size and is obsessed with bigger cars.
toyota primarily sold bigger cars like fortuner and qualis in the american market and this was
a great success.
china on the other hand prefers fuel-efficient sedans. Toyota in china marketed and sold cars
like prius, corolla and camry.
this was possible because of much focused segmentation, targeting and positioning of their

Ii. Manufacturing:
A). In 2003 toyota knocked its rivals ford into third spot, to become the world's second largest
carmaker with 6.78 million units. The company is still behind rivals general motors with 8.59
million units in the same period.
B). Analysis : its strong industry position is based upon a number of factors including a diversified product
range, highly targeted marketing and a commitment to lean manufacturing and quality.
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the company maximizes profits through total quality management or tqm which is an
integrative set of principles and behavior adopted by toyotas management for continuously
improving the quality of products and processes.
the company makes a large range of vehicles for both private customers and commercial
organizations, from the small yaris to large trucks. Therefore, if the demand in one sector
decreases, the company always has other sectors as back up and the chances of a complete loss
are low.
Iii. Strong brand image :
A. Toyota currently sells 70 models of cars under its namesake brand with corolla and prius as
flagship models. Toyotas brand image is also associated with environment friendly cars as it is a







I. Large scale recalls :

A) toyota had quite a few large-scale vehicle recalls over the past few years. The company
recalled 9 million vehicles in 2009-2010 and 7.43 million cars in 2012. Such recalls does not
only hurt the firm financially but significantly damages firms brand.
B) analysis: recalls have taken place mostly because of safety issues that have not been met or because of
certain defects in the cars produced.
toyota must ensure that the cars produced are faultless and of good quality.
an increase in recalls not only results in losses but also harms the brand image of the

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Ii. Weak presence in emerging markets :

A) toyota markets most of its products in the us, europe and in japan. Therefore it is exposed to
fluctuating economic and political conditions those markets. Emerging economies as china or
india make only a small percentage of all toyotas sales.

I. Hybrid and eco friendly technology :
A) lexus and toyota now have a reputation for manufacturing environmentally friendly vehicles.
Lexus has rx 400h hybrid, and toyota has it prius. Both are based upon advance technologies
developed by the organization. Toyota has also sold on its technology to other motor
manufacturers, for example
Ford has bought into the technology for its new explorer suv hybrid.
B) analysis: increasing fuel prices have boosted the demand for more efficient cars. Customers today are
more aware of the harm air pollution by vehicles causes to the environment. Therefore, there is a
big demand for environment friendly cars.
since toyota already has a first mover advantage in making hybrid eco friendly cars, it should
capitalize on this opportunity and invest more on hybrid r&d and produce more environment
friendly cars.
this will result in huge profits and increase toyotas market share.

Ii. New customer segments :

A) toyota is to target the 'urban youth' market. The company has launched its new aygo, which is
targeted at the streetwise youth market. The vehicle is a unique convertible with inbuilt sub
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B) analysis : the youth of today have become more independent and wealthy. This has created a big market
for cars. Therefore toyota is trying to capitalize on this opportunity by introducing the new aygo
for the youth. It attempts to capture the dj culture and the nature of dance to market this car.
even though the profits earned through the new aygo are not big, it has helped toyota increase
its market segment, which is crucial for expansion. Moreover, this segment may prove to be
highly profitable in the future.

Iii. Global expansion :

A) toyota is expanding its market share and operations in emerging economies like india and
china. Toyotas emerging market sales ratio reached 45% in 2011, an increase of 10% in the three
years since we achieved 35% in 2008. The toyota global vision calls for an emerging-market
sales ratio of 50% by 2015.
B) analysis : emerging economies have a huge demand for cars. Toyota must make sure it increases its
market share in the developing economies in order to survive and compete in the global scenario.
by increasing localization and strengthening the supply chain system, toyota is slowly
expanding into emerging markets.

I. Competition :

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A) toyota faces tremendous competitive rivalry in the car market. Competition is increasing
almost daily, with new entrants coming into the market from china, south korea and new plants
in eastern europe. Volkswagen group is strongly growing and gm steps up after its reorganization
to become more competitive than ever.
B) analysis : there is nothing much that can be done to curb the rising competition. But, competition can be
fought by introducing new products, slashing prices, increasing market segments and innovation.
toyota has introduced the yaris which is a very cheap car and has also sliced the costs of older
versions of corolla. The aygo and prius are examples of innovative products by toyota.

Ii. Shifts in exchange rates :

A) most of toyotas revenue and raw material come from foreign countries. The profits earned
abroad must be sent back to japan and converted to yen. Appreciating yen exchange rate against
other currencies means lower profits for toyota.
B) analysis : this is a threat, which is very difficult to minimize. Toyota will have to wait till the yen
depreciates but, this will result in delayed payments and increased debts which is bad for the
another solution could be setting up new bases in other countries so that they can enjoy their
profits through the exchange rate of that country.

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Other Strategies

Toyotas Generic Strategy (Porters Model)

Toyota Motor Corporations generic strategy is a combination of the cost leadership generic
strategy and the broad differentiation generic strategy. Cost leadership entails minimizing cost of
operations and selling prices. On the other hand, the broad differentiation generic strategy
requires developing business and product uniqueness to ensure Toyotas competitive advantage.
The combination of these generic strategies supports Toyotas global reach in all market
A strategic goal corresponding to Toyotas generic strategy is to minimize production costs to
attain cost leadership. The company does so through the just-in-time (JIT) manufacturing
method, which is also known as the Toyota Production System (TPS). This method addresses
Toyotas generic strategy by minimizing waste, inventory cost, and response time. As a result,
the firm achieves maximum business efficiency. On the other hand, Toyota has the strategic goal
of innovation to address the broad differentiation component of its generic strategy. Innovation
leads to unique and attractive products for all market segments. Thus, Toyota fulfills its generic

Toyotas Intensive Strategies (Intensive Growth Strategies)

Market Penetration. Toyotas main intensive growth strategy is market penetration. This
intensive strategy supports business growth by reaching and attracting more customers in the
firms current markets. To fulfill this intensive growth strategy, Toyota ensures that it offers
products for every market segment. For example, the company has sedans, trucks, SUVs, luxury
vehicles, and other product lines for every type of customer. This intensive growth strategy
supports the cost leadership component of Toyotas generic strategy by enabling the company to
maximize sales volume, which ensures profits despite relatively low selling prices.

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Product Development. Toyota uses product development as its secondary intensive growth
strategy. This intensive strategy supports Toyotas growth by attracting customers to new
products. The company uses this intensive growth strategy in the form of rapid innovation. The
company is known for its innovation processes. For example, through the Toyota Prius, this
intensive growth strategy empowers the firm to attract customers concerned about the
environment. This intensive growth strategy supports Toyotas broad differentiation generic
strategy by using innovative products that are attractive on the basis of uniqueness or advanced
Market Development. Toyota already has a global presence. As such, market development is
just a supporting intensive growth strategy for the business. In this intensive strategy, Toyota
grows by entering new markets or selling to new market segments. However, the company
already has presence in most markets around the world. Also, the firm already sells its products
to every market segment. This intensive growth strategy supports Toyotas cost leadership
generic strategy by maximizing the companys global market presence.


The Porter's five forces are planned to examine and appraise the force of company in the
operating industry. If forces study came to decision that profit were to decreases it shows the
business is unattractive. The three horizontal forces which Porter's analysis examines are new
entrant's threats, rival's threats and substitute products threats. In US market, Toyota initialised
the business with soaring growth. Only 3 cars manufacture in US market in 1950s when Toyota
was entering which shared 95% of the total market. The US market was 100 times larger than
Japanese market and for the manufactures all the dealers were associated with them. The US
companies were having excellent infrastructures and strong financial position. Three different
Japanese companies entered in to the US automobile market which was Toyota, Honda and
Nissan next to each other. In next four decades these companies found a specific way of establish
themselves in the US industry and contend profitably.
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1.Bargaining power of suppliers

The products are standardised suppliers are weak purchasers can incorporate backwards because
of number of suppliers which result in diffuse or weak customers. The automotive assembly
industries are distinct by this description in Japan and US where both the car manufactures have
work hard to establish the component business. Networks of suppliers were developed by the
Toyota production system which will supply the excellent material quantity and quality required
for manufacturing cars at the right time. This shows the weakness of the suppliers in the
bargaining power in terms of the company. There has been a major effect on profitability due to
the cost of the manufactures inputs like labour, services and raw material.
2.New entrants
Several entry barriers can occur which can be governmental, financial, intellectual and sales
economies. The sales economies was not in favour of the Toyota but was secluded by the laws of
ministry of international trade and industry after world war two. There were no nearly no entry
barriers for US and as a result Toyota employees researching exporting. In US entry barrier to the
dealer business were low which was a plus point for the Japanese companies. For a car company
entry barriers are high. In order to have a minimum efficient sale the new entrants have to
acquire a considerable market share.
3.Bargaining power of buyers
The companies dealing in manufacturing of cars in US were able to vertically integrate and they
were purchasing large supplies from part companies and enjoyed the power by being
concentrated. Manufacturing companies basically operate the supply companies. For example
like Mopar was supplying for Chrysler, Delco division for the General Motors. But in Japan the
companies supplying parts were sharing the administration and workers with the companies who
were manufacturing automobiles which was completely different business approach as compare
to US business. In both countries the dealers were fragment and weak. In comparison to US
industry, Toyota purchase large volume from parts companies and were vertically integrate.
Buyers also enhance their bargaining authority by the right of information from internet. As
corporation has a plenty of certain customers which makes by a little proportion of sales, the
bargain power with the manufactures would be little which lead to a weak threat for the industry
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4.Substitute products threats
As in both countries U.S. and Japan car were the dominant transportation system but threat of
public transportation was excessive. There is a slightly price elastic in new cars giving rise to
substitute transportation and value of a specific model is highly susceptible due to presence of
close substitute.
The complex area in the manufacturing car business is competition between them. The market
growth was slow and the firms were kept on increasing. More intense rivalry in US industry was
emerging between the manufacturing companies from 1970's. The firms compete on price and
non price dimension. By decreasing down the cost price margins the price competition erodes
profits while the fixed cost drive and marginal cost was drive by the non price competition.
Absence of differentiation opportunities lead to an increase in rivalry. All the automobile
companies engaged in manufacturing produce cars, trucks and SUV's which further rise the
rivalry. Strong threat is for profits due to the important market share variations.

Resource Based View is still a hot topic although the theory is more than 20 years old. In this
assignment, we will argue whether resource-based view analysis (RBV) has a strong relationship
with firm's performance, especially in achieving a sustainable competitive advantage. Besides,
this assignment focuses on contention that RBV is the best strategy route in developing a firm's
strategy. RBV will be discussed and evaluated. Generally, RBV focuses on the internal
environment of an organisation and looks for the values that derived from resources, capabilities
and competencies. Based on my analysis, RBV is not the best strategy that can fits all situations
of the company and Porter's industry analysis is needed to complement RBV in order to achieve
a sustainable competitive advantage in different kinds of environment and contexts.
Toyota is one of the examples that outperform among other automakers and maintain its
competitive advantages over others. It becomes the world largest automaker. It utilizes resources
and capabilities and form its competency that far superior to other competitors. Toyota has
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differentiated itself from other rivals, such as General Motors by its superior quality and
productivity which allows it to raise the utility of a product. Toyota brand has build confidence in
consumers' perspective and become more convincing. This help to gain the value creation among
customers. In these ways, firm can charge higher prices and gain more profit. Toyota pioneered a
lean production system that can hardly be imitated and assimilated. It will attain superior
efficiency and product of the firm as the functions can perform its activities that consistent in
high product quality, which leads to differentiation and lower costs. This system consists of a
whole range of manufacturing techniques, for example just-in-time inventory systems, selfmanaging teams, and reduced setup times for complex equipment. Toyota utilizes high-tech
performance features and upscale quality to compete in luxury car market with a supply chain
management and low cost assembly capabilities by producing Lexus models. The pricing
advantage compared to Mercedes and BMW models has attracted lots of consumers. Other rivals
can hardly imitate them in this low manufacturing costs and differentiated products (Thompson,
Strickland and Gamble, 2010, p.156). Toyota also keeps on learning and upgrading their
resources and capabilities to stay ahead of imitators (Hill and Jones, 2007, p.100). Toyota's
hybrid cars have successfully created new markets add value for the consumers. On the other
hand, rivals are putting their best effort to catch up Toyota. Besides, Apple has also outperformed
itself from other rivals. It produces many products such as iPhone, iPad, iPod and others. It
makes use of the capabilities and heterogeneous resources when innovating the products and
improving them continuously. Constant innovation has made it stand out among other
competitors. It is very difficult for other rivals to copy or imitate Apple's product design and
functionality. Apple's softwares are all specifically developed for its hardwares, the resources are
rare, non-substitutable and hard to imitate. This provides that Apple distinguish itself from
others. Apple is also very well known in its quality which added value to customers and it had
won a larger customer base.


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Inbound: The company almost obtain raw material from third party, they also handle small
parts not manufacture, and keep good relationship with their suppliers.

Operation: Toyota is properly manufactured and assembled, it is known for its reliability and
durability thanks to the efficient operations.

Outbound: They store and distribute their finished products to dealers to make them easily

Marketing & sale: They focus importantly on marketing and the promotions variations to
meet what the targeted customers need.

Service: Toyota appreciates and gives value to their customers, so after-sale, maintenance and
other services are included.

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Political Influences
The political influences in this industry is probably the most burning concern with organizations
going global and many countries restricting the growth of companies by many countries.
European Customs and Regulations heavily hamper expansion plans. FDI in many countries are
still heavily regulated and global companies are yet to set foot into emerging markets like India.
Economic Influences
The recent financial crisis has had a negative impact on consumer spending and outlook.
Disproportionate levels of income and consumer spending in developing countries like India and
China will impact growth of global companies. Exchange rates affect global sourcing and pricing
policies on a day to day basis.
Social Influences
Developing countries are not used to push type marketing and aggressive selling. Bulk buying
patterns predominantly present in USA, is non-existent in Asian countries. Language and cultural
factors is a barrier to globalization. Anti-Globalization movements in the recent past has affected
growth of global companies, especially companies originated USA.
Technological Influences
Development in technology and satellite systems has given a boost to Wal-Mart. Basic
infrastructure still lacks for effective warehousing and distribution, the lifeline of a retail chain.
Key learning
There appears to be legal and social hurdles ahead for global companies. Expansion into growing
and emerging markets throws in tremendous growth opportunity though localization would be a
critical success factor. Infrastructure needs to be developed to support activities of a global
distribution channel to achieve global competitiveness.

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Internal Analysis
Wal-Mart takes care of all the activities internally except partially outsourcing its logistics
requirements. Its systems integration from inventory, to stores, to headquarters to suppliers is the
lifeline of its success. The core activity remains in its bulk buying and inventory management
which supports Wal-Marts competitive advantage of pricing and every element shows traces of
cost leadership. Wal-Mart located its discount stores around regional warehouses allowing a
streamlined and low cost physical distribution

Inbound Logistics
Wal-Marts primary activity of receiving inventory is planned right from the point of production,
which Wal-Mart is not involved with. Wal-Mart has integrated systems with key suppliers which
communicate in real time data with sales information and stock status so it can replenished in
time. Shipments are timed and slotted and planned in an orchestral way.

Wal-Mart maintains a lean approach to inventory. Wal-Mart innovated a technique of
replenishment called the Cross-Docking where incoming goods are offloaded into outgoing
trucks directly without stocking them even for a few hours. Most goods pass through the
warehouses within a span of 48 hours, enabling minimum idle time and lowering excess
inventory possibilities. Most of the goods never touch the floor of the warehouse, as goods are
passed on 24 miles length of conveyor belts between incoming trucks to outgoing trucks.

Outbound Logistics
Goods are transferred within 48 hours of receipt from suppliers. The replenishments are also
done twice weekly, which is double the industrys standard.

Marketing and Sales

Wal-Mart maintains a simple and effective marketing strategy which it has managed to replicate
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globally apart it being the focus of its strategy. The Every Day Low Price (EDLP) is simple and
eliminates unnecessary advertising trying to push sales, as Wal-Mart has successfully sold the
concept to the customers, that it sells its products at the lowest prices, everyday. This is one of
the most interesting attributes of Wal-Mart.

Wal-Marts aggressive yet subtle People Greeters and in its own fashionable and proud way
Aggressive Hospitality are the foundations for Wal-Marts success in the highly competitive

Wal-Mart maintains its own fleet of 2000 plus trucks which have scheduled deliveries between
warehouses to stores minimizing delays and over reliance from suppliers.

Human Resource Management

Wal-Mart is the only retailer to be in Fortunes 100 Best Places to Work. Wal-Marts
empowerment of Associates is laudable with instances such as allowing its Associates to get on
the network and lower its prices, nationwide if its found to be higher than its competitors, all this
done without any consultation or permission requests from superiors.

Technology Development
Wal-Marts technology and inventory management systems and software are better than the best
in the world and also the lifeline of the organization. Wal-Marts early innovations and
experimentation apart from investments light-years ahead of its time into VSAT capabilities have
boosted its success.

Wal-Marts satellite communication and electronic data interchange links all its stores to over
4000 suppliers creating the finest procurement co-ordinated scenario. Wal-Mart integrates its
supply chain management activities with key suppliers like P&G with direct shipments from
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P&Gs warehouses to Wal-Marts stores and warehouses. Wal-Mart inventory management is so

effective that over 70% of its merchandise is purchased and paid for by customers, even before
Wal-Mart has actually paid for the same to its suppliers. Wal-Mart has outsourced a substantial
activity to USSO enabling Wal-Mart to maintain its logistics cost

SWOT Analysis
1. Being the largest retailer in the world, with unmatched scale of operations and
strong market power over suppliers and competitors. Wal-Mart is the worlds largest
company by revenue and the largest retailer in the world. It is also the worlds largest
private employer, with more than 2.2 million staff. The company is a retail market leader
in the U.S. and is a major competitor in all geographic markets in which it operates.WalMarts revenue reached US$485 billion in 2015, more than the Carrefour, Costco, Tesco
and (US$89 billion) revenues combined. The company employed twice as
many people and owned about 5 times more retail space than its top 3 rivals.

Forbes listed Wal-Mart as the 20 most valuable brand in the world in 2015 , worth
US$24.7 billion. No other direct competitor, except Amazon, has made it to the Forbes
list of the most valuable brands.


What does being the largest retailer in the world mean to Wal-Mart?

Economies of scale. The company can share its fixed costs over many products,
which makes Walmart one of the cheapest places to shop.

Efficient and effective use of resources. Wal-Mart can use its resources, such as
distribution facilities, information systems, knowledge and other capabilities and skills,
more efficiently and effectively over a large number of locations.

Huge gains from implementing best practices. The company can identify better
ways of performing tasks, managing stores and hiring new employees and can achieve
huge gains by implementing these best practices in its vast network of stores.

Experimenting with less risk. The company can engage in many experiments
within its stores or in new store formats without the risk of losing a substantial amount of
profits or revenue.
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Market power over suppliers and competitors. Due to its size, Wal-Mart can
exercise its market power over suppliers by requiring lower prices from them. The
company can also affect the competition by selling selected items at a loss, thus driving
competition out of the market.


Labor related lawsuits. Walmart faces labor related lawsuits every year, which
costs millions of dollars for the company. It is criticized for poor work conditions, low
wages, unpaid overtime work and female discrimination. In addition to litigation costs,
corporates reputation has been damaged and fewer skilled workers are willing to work
for it.


High employee turnover. The business suffers from high employee turnover that
increases firms costs, as it has to train new employees more often. The main reason for
high employee turnover is low skilled, poorly paid jobs.


Little differentiation. Walmart has no differentiation compared to its competitors,

which might hurt the company in the future if commodity prices or average consumer
income would increase. In this case, low cost leadership strategy wouldnt be as effective
as it currently is and Walmarts main competitive advantage would erode.


Negative publicity. The company is often criticized for its questionable practices
such as bribery of authorities or poor work conditions. Negative publicity damages
corporates reputation.


Retail market growth in emerging markets. Retail markets grew by at least 5%

on average in emerging markets in the last year, opening huge opportunities for
Walmarts revenue growth. The business currently operates in Brazil, Mexico, China and
India markets. Walmart should increase its presence in these markets to sustain future


Rising acceptance of own label products. The sales of private label products
have increased by more than 40% over the last 10 years. This reveals increasing
consumer acceptance of supermarket chain products compared to national brand
products. Walmart has an opportunity to increase the number of private label products
sold at its stores and earn higher profit margins.


Trend toward healthy eating. The current trend of eating healthier food has
resulted in higher demand for grocery products. Walmart has an opportunity to expand its
grocery stores to earn more income from this trend.
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Online shopping growth. Online retail sector grew by 4.7% in the US in 2011,
reaching $197 billion. Walmart being the biggest offline retailer has huge opportunities to
expand its presence in online retail market. The company can offer convenience to pick
up the goods ordered online in its more than 10,000 stores and can offer even lower
prices online than at the store. As a result, Walmart can reach more customers and
increase its revenue.


Increasing competition from brick and mortar and online competitors.

Competitors like Target, Costco, Amazon and Tesco (in UK) are putting huge efforts to
eliminate price differences that Walmart enjoys. Except the lower prices, Walmart doesnt
differ from other low cost retailers and will experience increased competition from them
in the future.


Increasing resistance from local communities. Walmart superstores have a

negative impact on local retailers and communities. Some of the local retailers are usually
forced to close off when Walmart superstore opens in the area. This affects not only the
retailers but their families and the community as a whole.


Rising commodity product prices. Rising commodity prices squeeze Walmarts

profit margins and erode its competitive advantage. As prices go up, the cost difference
between the retailers decreases and competition shifts from price to product and service


Cost leadership
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Analysis of the value adding activities supporting the generic strategy shows clear elements of
cost focus. Low cost leadership helps the firm above average returns in the industry despite
strong competitive forces. Traces of cost leadership are noticeable in the value chain. Wal-Mart
saves costs by holding stocks for less than 48 hours in its inventory. Wal-Mart is known to
negotiate with suppliers for the lowest cost of the product without any frills and marketing
expenses which adds to the cost later. Wal-Marts purchase by the truckload saves costs again by
bulk purchasing. Wal-Marts inventory handling and logistics distribution with its own fleet of
2000 plus trucks help attain a cost effective distribution channel than relying on unreliable
suppliers networks which costs in delays.

Wal-Mart appears to have a differentiation strategy. The differentiation strategy is one of
differentiating the product or service offering of the firm, creating something that is perceived
industry-wide as being unique. It can be design or brand image, technology, features, customer
service, dealer network or other dimensions.
High degree of customer service with store greeters and 10 foot attitude policies reaffirms
Wal-Marts differentiation from its competitors.

The third generic strategy advocated by Porter is the focus strategy. The focus strategy is
focusing on a particular buyer group, segment of the product line or geographic market as with
differentiation, focus may take many forms. Wal-Mart right from its foundation located its stores
to out of town areas with small populations. This was a segment ignore by its competitors giving
Wal-Mart an edge over competition by locating itself in a low competitive environment before it
creates competition. Wal-Marts focus on the segment of people targeted as well as its location of
stores, does give it an attribute of the focus strategy.
Effective implementation of any of these generic strategies usually requires total commitment
and supporting organizational arrangements that are diluted if there is more than one primary
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target. Arguably Porter termed organizations attempting cost leadership and differentiation
together as stuck-in-the-middle and it does not lead to competitive advantage and its

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