By Michael E. Porter
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Extra resources for Competitive advantage: Creating and Sustaining Superior Performance - With a New Introduction
Since each generic strategy often implies a different pattern of investments and Competitive Strategy: The Core Concepts 25 different types of executives and cultures, there is a risk that a business unit that is “odd m an out” will be forced to live with inappropriate corporate policies and targets. F or example, an across-the-board cost reduction goal or firmwide personnel policies can be disadvantageous to a business unit attem pting to differentiate itself on quality and ser vice, just as policies toward overhead appropriate for differentiation can underm ine a business unit attem pting to be the low-cost producer.
How does this relate to the concept of industry structural analysis? Satisfying buyer needs is indeed a prereq uisite to the viability of an industry and the firms within it. Buyers m ust be willing to pay a price for a product that exceeds its cost of production, or an industry will not survive in the long run. Chapter 4 will describe in detail how a firm can differentiate itself by satisfying buyer needs better than its competitors. Competitive Strategy: The Core Concepts 9 Satisfying buyer needs may be a prerequisite for industry profit ability, but in itself is not sufficient.
H am m erm ill’s equipm ent is m ore suited to shorter runs with frequent setups. A focuser takes advantage o f suboptim ization in either direction by broadly-targeted competitors. C om petitors may be underperforming 8Overall differentiation and differentiation focus are perhaps the most often confused strategies in practice. , Cray Research in computers). 16 COM PETITIVE A D V A N T A G E in meeting the needs of a particular segment, which opens the possibil ity for differentiation focus. Broadly-targeted com petitors may also be overperforming in meeting the needs of a segment, which means that they are bearing higher than necessary cost in serving it.
Competitive advantage: Creating and Sustaining Superior Performance - With a New Introduction by Michael E. Porter