Examining business-level strategy in terms of generic strategies has limitations. Firms that follow a particular generic strategy tend to share certain features. For example, one way that cost leaders generally keep costs low is by not spending much on advertising. Not every cost leader, however, follows this path. While cost leaders such as Waffle House spend very little on advertising, Walmart spends considerable money on print and television advertising despite following a cost leadership strategy. Thus a firm may not match every characteristic that its generic strategy entails. Indeed, depending on the nature of a firm’s industry, tweaking the recipe of a generic strategy may be essential to cooking up success.
KEY TAKEAWAY
- Business-level strategies examine how firms compete in a given industry. Firms derive such strategies by executives making decisions about whether their source of competitive advantage is based on price or differentiation and whether their scope of operations targets a broad or narrow market.
EXERCISES
- What are examples of each generic business-level strategy in the apparel industry?
- What are the limitations of examining firms in terms of generic strategies?
- Create a new framework to examine generic strategies using different dimensions than the two offered by Porter’s framework; What does your approach offer that Porter’s does not?
- 14452 reads
