Porter’s Competitive Strategies
- Lower cost strategy
- Differentiation strategy
Lower cost strategy is the ability of a company to design, produce, and market a comparable product more efficiently than its competitors.
Differentiation strategy is the ability of a company to provide unique and superior value to the buyer in terms of product quality, special features, or after-sale service. Before using one of the two competitive strategies, the firm must choose the range of product varieties it will produce, the distribution channel it will employ, the types of buyers it will serve, the geographic areas it will sell, and the array of related competitive companies.
S W O T Analysis
SWOT is an acronym used to describe the particular Strengths, Weaknesses, Opportunities, and Threats.
The External environment consists of variables (Opportunities and Threats) that are outside the organization and not typically within the short – run control of top management.
The internal environment of a corporation consists of variables (Strengths and Weaknesses) that are within the organization itself.
Strategy Formulation
Strategy formulation is the development of bng – range plans for the effective management of SWOT analysis. It includes defining the corporate mission, specifying achievable objectives, developing strategies, and setting policy guidelines.
Mission
Mission is the purpose of the organization.
A well – conceived mission statement defines the fundamental, unique purpose that sets a company apart from other firms of its type and identifies the scope or domain of the company’s operations.
Objectives
Objectives are the end results of planned activity. Objectives must tell what is to be accomplished by when and quantified if possible. The achievement of corporate objectives should result in the fulfillment of a corporation’s mission.
Strategies
A strategy of corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage.
Industry Analysis
Porter’s Approach to Industry Analysis
Generating Alternative Strategies by Using a TOWs Matrix
To generate a TOWs Matrix by using the External Factor Analysis Summary (EFAS) and the Internal Factor Analysis Summary (IFAS)
IFAS
| Internal Strategic Factor | Weight | Rating | Weighted Scores | Comments |
| Strengths | ||||
| S 1 | ||||
| S 2 | ||||
| S 3 | ||||
| S 4 | ||||
| Weaknesses | ||||
| W 1 | ||||
| W 2 | ||||
| W 3 | ||||
| W 4 | ||||
| Total Scores |
EFAS
| External Strategic Factor | Weight | Rating | Weighted Scores | Comments |
| Opportunities | ||||
| O 1 | ||||
| O 2 | ||||
| O 3 | ||||
| O 4 | ||||
| Threats | ||||
| T 1 | ||||
| T 2 | ||||
| T 3 | ||||
| T 4 | ||||
| Total Scores |
Generating Alternative Strategies by Using a TOWs Matrix
The TOWs Matrix illustrates how the external opportunities and threats facing a particular corporation can be matched with that company’s internal strengths and weaknesses to result in four sets of possible strategic alternatives
| IFASEFAS | S | W |
| O | SO strategies use strengths to take advantage of opportunities | WO Strategies take advantage of opportunities by overcoming weaknesses |
| T | ST strategies use strengths to avoid threats | WT strategies Minimize weaknesses and avoid threats |
