Strategic Planning and Generic Competitive Strategies - Assignment Example

Generic Competitive Strategies Generic competitive strategies Porter defines generic competitive strategy as a methodology established and developed to provide a strategic plan for companies compete with the aim of gaining a competitive advantage in the market. Porter also states that companies and organizations can improve and increase their strengths to position themselves strategically within a competitive environment. Generic competitive strategies are applied to gain competitive advantage over competitors in a given production line. Generic competitive strategies are broadly classified into broad cross-section of buyer and narrow cross-section of buyers. There are five components contained in these categories. These include best – cost provider strategy, overall low-cost provider strategy, broad differentiation strategy, focused differentiation strategy and focused low-cost strategy. Overall low-cost provider strategy is concerned with the provision of lower costs of products and services than those of rivals. Companies employ the overall low-cost strategy to achieve their cost advantages and reduce the level of competition from rivals since rivals find it difficult to copy and match the strategy. Focused low-cost strategy is a competitive strategy that concentrates mainly on a narrow segment of buyers. Under this strategy, a company can out-compete its competitors on cost, thus enabling it to obtain a larger market segment at a lower price. Broad differentiation strategy is a strategy based on a broad cross-section of buyers that involves the creation of products that are different and unique from those of competitors. The differentiation level of products depends on the industry in which the company is based. However, companies may differentiate its products features, functionality and support. Broad differentiation strategy enables a company to reach a large number of consumers or clients, thus increasing their market segment and profit margin. Focused differentiation strategy is a strategy based on a narrow cross-section of buyers. The strategy ensures that products produced by a company meet certain requirements and tastes of the market better that product offering from competitors. These products are mainly produced in small volumes since the target market is usually small. Best-cost provider strategy is a hybrid strategy that contains some features of differentiation and low-cost strategies. The strategy provides customers with more money valued products that satisfy consumers’ expectations based on the quality, features, performance and meets their price expectations. The strategy aims at providing products at the best cost or the lowest prices in the market with various comparable differential features. According to Marc (2014), companies must determine the specific strategy to use before creating a generic competitive strategy. There are several steps used in determining the best and effective strategy to employ in a company. These steps include; Creating strengths, weakness, opportunity and threats analysis or chart for each competitive strategy. Conducting a well-defined analysis of the industry in which the company is engaged in. Carrying out a comparison between the SWOT analysis of strategies and the results of business industry. Companies use different types of generic competitive strategies based on their industries and the competition level. For instance, the Toyota Company employs both differentiation and low-cost generic strategies to effectively survive and gain competitive advantage in the market under heavy competition in the automobile industry. The company provides a wide range of automobiles of different types and targeting different consumers. It uses broad cross-section strategies where it targets a large number of buyers in different areas. For example, Toyota has four wheel drive vehicles and SUVs for people living or travelling in severe weather conditions and mountainous areas. In addition, it produces two wheel drive and hybrid models such as Prius mainly for eco-friendly people. Under their competitive strategies, Toyota produces automobiles for various price ranges. For example, the company produces low price vehicles such as Corolla, Toyota Probox and Vix. On the other hand, the company also produces high priced vehicles such as Lexus and Landcrusers. For this reason, employment of these generic competitive strategies enables the Toyota Company to compete effectively and gain competitive advantage over other automobile companies in the world. Strategic planning and Panera Bread Question one The Panera Bread Company’s strategy is to provide a premium café and bakery experience to sub-urban dwellers and urban workers. The company employs the broad differentiation strategy as the generic competitive strategy. Under this strategy, Panera Bread Company targets different people such as men, women and children living in suburban areas and those working within the city. Panera Bread strives to establish a competitive advantage based on a combination of environment, product and great service. Question two The SWOT analysis reveals the strengths, weaknesses, opportunities and threats of Panera Bread Company. Strengths include; attractive and appealing menu, break-baking expertise, good brand name, high customer satisfaction rating, good franchises, financial strength and nationwide bakery-café leader. Some weaknesses include the less publicity of the brand name and higher sales at franchised stores than owned stores. Threats include competitors imitate menu offering, market saturation in the future and competition from other chains. The company’s opportunities are opening more outlets, international expansion. The company has competencies in bakery due to the presence of experts, the strategic location of Panera and successful provision of five submarkets such as lunch, breakfast, light evening, take out and chill out. Question three Primary components include operating performance, customer service and inbound logistics. The most important component is inbound logistics since it defines what differentiates the company’s products from others and the most important competitive benefit of the company. Performance should be focused and should ensure maximum customer satisfaction. Services and quality of products should be maintained. Questions four The management of Panera Bread Company should address issues of high cost, distribution systems, geographic location and resistance to sudden system changes such as depression, crop disease and recession. The cost of products should be relatively affordable to consumers. Distribution systems used in the company should ensure that wastage is minimal. Question five Panera Bread should consider the operating performance and future growth of the company. As a result, the management should continuously provide new products to attract customers to their restaurant. The geographical location should be expanded to accommodate more people. Lastly, the company should offer rewards, gifts and promotions to the dedicated customers who introduced new customers. In conclusion, I would transform the management and workforce through introduction of new technological devices such as automated servers. In addition, inquiry sector would be effective to answer inquiries from customers. Lastly, I would involve customers in activities such as sports and games, thus creating a good customer relationship. References Marc (2014). Strategy frameworks: Major Strategy Frameworks/ Generic Competitive Strategy. Entrepreneurial Insights. Retrieved from http://www.entrepreneurial-insights.com/generic-competitive-strategy/ Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2014). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases (19th ed.). New York: McGraw-Hill Irwin. Little C. (2014). Strategic management: Five Generic Competitive Strategies. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0CCQQFjAB&url=http%3A%2F%2Fwww.baskent.edu.tr%2F~kvaroglu%2F5.ppt&ei=amTLVOF85YLuBviEgMAP&usg=AFQjCNHMPakPVYQWriDrd7bOkn9G5vkIlA&sig2=qJcHjg5ljROc_RLCLXodwQ&bvm=bv.84607526,d.ZWU Read More