Question

Assignment 4: generic strategies

The four strategies to choose from are:

1)Cost Leadership

2)Differentiation

3)Cost Focus

4)Differentiation Focus

pick an industry: computers

firms: Apple,windows,gaming computer, chromebooks

For each firm, explain why the target market is broad/narrow and explain the source of competitive advantage as low-cost or differentiation.

Also identify best cost providers (if any with exmaple and explanation).

Answer 1

The above mentioned 4 strategies are actually part of porter's generic strategies.

Cost Leadership - These firms are focused on providing the low cost product or solution for everyone. Which means , that the product/solution being offered is not a differentiated one and only area where these firms are competing is cost.

DIfferentiation - These firms are focused on differentiating their products/soutions in any area apart from cost. This means that these firms are ready to spend extra resource to seperate their product from other options available in the market. Also, these firms expect to garner a premium for extra service or features for their product.

Focus - this is the third stratgey which can be further divided into - Cost focus or Differentiation focus.

1. Cost focus strategy aims at targeting only a specific segment and then competing with other products in that segment on cost.
2. Differentiation focus strategy also aims at only specifc customer segment by offering differentiated product/service for that segment.

Now , for computer industry

Apple - Their target market is narrow with differentiation as the competitive advantage. Source of their competitive advantage arrives because of the better quality machines running on better operating system. Also, they have developed their own ecosystem of software solutions over the years. It is due to this competitive advantage that apple commands premium from its cutomers.

Windows - Windows, unlike apple , has a broader market with cost leadership as a source of competitive advantage. Windows have a very large market presence combined with low cost for software development . They have allowed their operating systems to be used on multiple other computer manufacturers like Dell, HP etc.

Gaming laptops - Targert market is narrow with differentiation focus as a source of competitve advantage. Gaming laptops are only focsed towards gamers who love to play games with heavy graphics and need high RAM for better quality. While these laptops are differentiated from other laptops available in the market on processor speed, RAM size, speakers quality etc, this differentiation comes at extra cost for customer.

ChromeBooks - Target market is narrow with cost as source of competitve advantage. Chromebooks are at cheaper end of spectrum for laptops. These laptops come loaded with basic applications and chromebook require internet connection to work. Hence, chromebooks are essentially targeting a specific segment of customer who just need laptop for basic office work and also does not want to buy expensive laptops available in the market.