Porter’s Generic Strategies
Categories: Financial Theory
Porter's generic strategies are ways of gaining a competitive "edge" that gets you the sale, and takes it away from your competitors.
There are two main drivers: Compete Based on Lowest Cost...or Compete Based on Perceived Top Quality. Additionally, the strategy can target multiple markets (Broad) or smaller market segments (Niche). All business decisions need to be aligned to one strategy. Otherwise, costs can’t be contained, and perceived quality won’t be achieved either.
The Porter’s strategy is the North Star that directs and aligns all actions.
Like...imagine if Walmart (Broad Cost Leader) attempted to manufacture high-end $1,000 backpacks in October, because they had stocked out of basic backpacks in September.