Profit Boosters – Scale « The Strategy Workshop. In his book, Competitive Strategy, Michael Porter describes two generic strategies – differentiation and cost leadership.
He shows diagrammatically that return on investment (under each of these strategies can be optimized). He explains that, under a differentiated strategy, the organization focuses on creating a point of difference in its service offering to an homogeneous niche market(s). Because customers perceive value in exchange, they are prepared to pay a slight price premium.
Although costs are well managed, the differentiated player is not the lowest cost player in the industry (see diagram below). Oxford Learning Lab - Watch it. Learn it. Badge it. Designed by Michael Porter in 1979, Porter’s Generic Strategies is a frameworks used to outline the three major strategic options open to organizations that wish to achieve a sustainable competitive advantage.
Each of the three options needs to be considered within the context of two aspects of the competitive environment. Firstly, the sources of competitive advantage which establish whether the products are differentiated in any way, or if they are the lowest cost producer in the industry. "Stuck in the middle" is the most successful strategy. The survey 2012 analyses strategies and business models in the software industry.
A widely applied understanding of competitive strategies was introduced by Michael Porter, who mainly defines two strategies: The cost leadership gives firms a competitive edge in producing products at lower costs then competitors. For example through process optimization. The SaaS Hybrid Dilemma : Don’t Get Stuck in the Middle.