Operations Management

Operations Management

Organisational Competitiveness

Organisational competitiveness can be defined as the ability that a firm has to offer services or products which meet the standards of the international, as well as, local market (www.businessdictionary.com). These products or services are provided to customers at a price which is competitive in the market and which provides the firm healthy returns on the resources that the company has employed in the firm or have consumed to produce products or services (Porter, 1980. pp.125).

Porter's Generic Business Strategy

Michael Porter described the generic business strategies which can be used to achieve competitive advantage in the market and industry, and maintain it. He proposed three generic strategies. These three strategies are cost leadership strategy, differentiation strategy and segmentation strategy (Murray, 1988, pp. 390-400).

Cost leadership Strategy

In the cost leadership strategy, a firm decides to become the most low cost producer in the industry. It can include the pursuit of proprietary technology, preferential access to raw materials, economies of scale and other factors. A firm, which is competing on cost leadership strategy, must find, assess and exploit all the sources that can lead to cost advantage. If a firm succeeds in achieving and sustaining overall cost leadership, then it can become one of the market leaders (Porter, 2004, pp.56). This can only be done if the firm command the prices of its products or services at or near the average of the industry.

Differentiation Strategy

If a company follows a strategy to seek uniqueness in the market and industry along the dimensions which the customers tremendously value, then it is following a differentiation strategy. The company may select one or more attributes that the customers perceive as important and primary. The firm uniquely positions itself in the minds of the customers to meet those needs. the uniqueness is rewarded with a ...