MANAGEMENT

Exam Questions

Exam Questions

Question 1: Critically evaluate the different bases (generic strategies) and “routes” (Bowman's Strategy Clock) that an organisation may adopt to achieve and sustain competitive advantage. Use examples to illustrate your answers.

Answer:

An organisation can use various strategies that for achieving the sustainable competitive advantage in the industrial and organisational level. The strategic managers of the organisation are supposed to select such operational-level, business- level and corporate-level strategies that would support the overall mission of the organisation and ultimately its vision. There are mainly three generic strategies designed by Michael Porter those are segmentation strategy, cost leadership strategy and differentiation strategy. All these strategies can help an organisation in achieving competitive advantage in the entire market. The above stated three generic strategies are well defined with two dimensions: strategic strength and strategic scope.

The strategic strength is known as the supply side dimension and it looks after the core competency and strength of the organisation. According to Michael E. Porter there are two most important competencies that an organisation needs to effectively monitor for maintaining competitive advantage: Product cost and product differentiation. Product cost can provide competitive edge to an organisation if an organisation is able to produce quality goods or services within minimum costs and by utilizing minimum resources of the organisation. The strategic scope is known as the demand side dimension and it mainly looks after the composition and size of the market in which the organisation is competing to accomplish its set targets.

The generic strategies allows an organisation to engage in a unique and well directed approach that helps in maintaining distinctive position in the entire market. Cost Focus is a broad approach towards the manipulation of pricing and production strategies. In this strategy, the organisation concentrates on increasing profits by focusing on the difference between the cost of production and the consumer cost. This is a somewhat internal strategy in which the organisation chooses to create a cause for which an effect will take place in the consumer market. Changes in the cost of production will alter production patterns; which will in turn alter product distribution and availability, eventually leading to a change in consumption at the consumers' end. In comparison to Cost Focus, the generic strategy of Cost Leadership is an aggressive strategy in which the organisation takes influence from market dynamics. Under this strategy, the organisation takes on an approach in which the organisation ensures that pricing strategies allow the product to stand out in the consumer market. Common examples of such cost strategies can be found in cases where organisations choose to launch discounts that are heavily directed towards cost reduction for customers.

Differentiation is another strategy that allows the organisation to acquire a competitive advantage through the development of competencies that are unique to the organisation and have a broad market scope. Differentiation is a highly complex approach since it has multiple variants that an organisation can utilize in order to develop a competitive ...