1. Market Penetration requires increasing the existing product sales in the existing market. The main strategic objective is to obtain more market shares or get the position of market leader. As an example: Aldi followed the market penetration strategy by opening thousands of stores across UK offering the same products.
2. Product Development means to increase sales by improving or introducing a product which fulfils the demands of the market. For example: Coca Cola introduced Coke Zero, Coke Diet, to target the health conscious customers.
3. Market Development focuses on increasing the sales for an existent product by introducing it into new markets. This strategy is often used by the companies which plan to expand globally, by adding new
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In 1985, Harvard Business School Professor Michael Porter published his new book “The Competitive Advantage” which focuses the organisation internal environment. In this book, along with an in depth analysis of the competitive strategies which are Cost leadership, differentiation and Focus, he also concentrates on the firm’s value chain.
1. Cost Leadership: In cost leadership, an organisation aims to become the low cost provider in its industry. Examples are Aldi, Lidl, Ryan Air etc
2. Differentiation: In a differentiation strategy a firm seeks to be unique in its industry. KFC follows a differentiation strategy as the recipe for its products is very unique and never been imitated.
3. Focus: This strategy rests on the choice of a narrow competitive scope within an industry. The focus strategy has two components. (a) In cost focus, a firm seeks a cost advantage in niche market, (b) In differentiation focus; a firm seeks differentiation in its target segment. Examples are car manufacturers like Aston Martin, Rolls Royce, and Bentley. These companies target a niche market and manufacture the cars according to the customers required specifications. (Management technology policy,
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He emphasized that businesses should strive to achieve one of the generic strategies in order to achieve a competitive advantage but Henry Mintzberg disagreed with this idea and in 1994, came up with the concept of Emergent Strategy. He argued that the organisations with constantly changing business environments need to be flexible in order to benefit from various opportunities.
In his article “The fall and rise of strategic planning” Mintzberg argues that strategic planning often spoils strategic thinking, causing managers to confuse real vision with the manipulation of numbers (Mintzberg, 1994). He adds “Strategic planning, as it has been practiced, has really been strategic programming, the articulation and elaboration of strategies, or visions, that already exists”.
The author states the importance of ‘syntheses, drawing together various sources of information to create this direction. He further writes that Formal planning is always dependent on the conservation and reorganisation of established categories and the established types of products, overlaid on the current units of structure. But real strategic change requires not merely rearranging the established categories, but inventing new