GE, by that time, had approximately different business units and was disappointed with the profits derived from its investments.
You, therefore, need to be confident that you can achieve and maintain the number one position before choosing the Cost Leadership route.
Companies that are successful in achieving Cost Leadership usually have: Access to the capital needed to invest in technology that will bring costs down. A low-cost base labor, materials, facilitiesand a way of sustainably cutting costs below those of other competitors.
The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you, and that other competitors copy your cost reduction strategies. This is why it's important to continuously find ways of reducing every cost. One successful way of doing this is by adopting the Japanese Kaizen philosophy of "continuous improvement.
How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support, and also brand image that your customers value.
To make a success of a Differentiation strategy, organizations need: Good research, development and innovation. The ability to deliver high-quality products or services.
Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings. Large organizations pursuing a differentiation strategy need to stay agile with their new product development processes.
Otherwise, they risk attack on several fronts by competitors pursuing Focus Differentiation strategies in different market segments.
The Focus Strategy Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low-cost or well-specified products for the market.
Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors. As with broad market strategies, it is still essential to decide whether you will pursue Cost Leadership or Differentiation once you have selected a Focus strategy as your main approach: Focus is not normally enough on its own.
But whether you use Cost Focus or Differentiation Focus, the key to making a success of a generic Focus strategy is to ensure that you are adding something extra as a result of serving only that market niche. It's simply not enough to focus on only one market segment because your organization is too small to serve a broader market if you do, you risk competing against better-resourced broad market companies' offerings.
The "something extra" that you add can contribute to reducing costs perhaps through your knowledge of specialist suppliers or to increasing differentiation though your deep understanding of customers' needs. Generic strategies apply to not-for-profit organizations too.
A not-for-profit can use a Cost Leadership strategy to minimize the cost of getting donations and achieving more for its income, while one pursuing a Differentiation strategy will be committed to the very best outcomes, even if the volume of work it does, as a result, is smaller.
Local charities are great examples of organizations using Focus strategies to get donations and contribute to their communities. Choosing the Right Generic Strategy Your choice of which generic strategy to pursue underpins every other strategic decision you make, so it's worth spending time to get it right.
But you do need to make a decision: Porter specifically warns against trying to "hedge your bets" by following more than one strategy. One of the most important reasons why this is wise advice is that the things you need to do to make each type of strategy work appeal to different types of people.
Cost Leadership requires a very detailed internal focus on processes. Differentiation, on the other hand, demands an outward-facing, highly creative approach. So, when you come to choose which of the three generic strategies is for you, it's vital that you take your organization's competencies and strengths into account.
Use the following steps to help you choose. For each generic strategy, carry out a SWOT Analysis of your strengths and weaknesses, and the opportunities and threats you would face, if you adopted that strategy.
Having done this, it may be clear that your organization is unlikely to be able to make a success of some of the generic strategies.Strategic analysis of Apple Inc.
1. Introduction 2 2. Strategic position 2 SWOT analysis 2 3. segmentation to develop its model namely Bowman’s Strategy Clock (Thomson and Baden-Fuller, ). This model is the extension of Porter’s A Strategic Analysis of Apple Corporation.
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Apple's free iTunes software is a good example of business unit success. The iTunes software isn't just an application that plays music. The iTunes software is the gateway to the iTunes Store where consumers can subscribe to podcasts, purchase ebooks, and download applications.
The aim of the report is to conduct a research on Bowman's Strategy Clock which will demonstrate a rational, reflective and critical evaluation of the concept. To . Bowman’s Strategy Clock is a model used in marketing to analyse the competitive position of a company in comparison to the offerings of competitors.
It was developed by Cliff Bowman and David Faulkner as an elaboration of the three Porter generic strategies. A business’s strategic competitive position can be explicitly analyzed using Bowman’s strategic clock (Thomson and Baden-Fuller, ).
The strategic clock enables business managers and all other business stakeholders to think and act strategically in an effort to ensure that they attain the desirable differential advantage.
Bowman’s Clock. Expanding Upon Porter They created a diagram know as the Bowman’s Strategic Clock. This breakdown has been very influential on strategic theory, so below we give a brief introduction. Low Price/Low Value. Example: Apple computer differentiates its laptop products from PC makers by offering a unique user experiences. Businesses use the marketing strategy of product differentiation to distinguish their own products from those of their competitors. Since the s, Apple Inc. has successfully used product differentiation to separate its products from those of other electronics manufacturers. Apple's free iTunes software is a good example of business unit success. The iTunes software isn't just an application that plays music. The iTunes software is the gateway to the iTunes Store where consumers can subscribe to podcasts, purchase ebooks, and download applications.
Apple Inc Bowmans Strategic Clock. Apple Computer, Inc. whose humble beginnings were borne from two high school friends, Steven Wozniak and Steven Jobs, is now based in Cupertino California and is a Fortune company. The company began in when Wozniak designed what would become the Apple l (Apple Computer, ).