Business Case study
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DownloadCompetitive Advantages
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The level at which a company is on an industrial analysis point of view has a direct impact on the determination of the firm’s profitability and whether the profits being made are lower or above the set industrial average profitability performance. Being above the industrial average thus shows the firm can maintain a competitive advantage over its competitors. Profitability thus determines a firm’s competitive advantage over others. A firm thus can adopt a set of generic strategies all aimed at being ahead of its competitors. The strategies are called the porter’s Four generic strategies. The strategies include cost leadership, adopting a differentiation strategy, having a market cost focus and lastly having a differentiation focus. Through a focus strategy, one can either choose between a cost focus and probably a differentiation focus (Porter, 1980). Cost leadership guarantees that a firm becomes a market leader by having a low cost of its products. Differentiation entails a firm being unique through the various dimensions that its consumers identify with. Differentiation Focusing involves paying attention to a specific market segment only and concentrate on their needs. Finally, Cost focusing entails a pricing strategy tailored to a specific market segment.
The porter’s four competitive strategies (differentiation, cost, cost focus and differentiation focus) play a great impact in the determination and organization of a value chain and its management.
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The value chain determines the activities of the firm in the generation of the final service or good to be sold to the consumers. For example, if the strategy is differentiation, then the firm has to make its customers a priority. By this then the firm ensures its marketing strategy through customer incentive provision, better customer care and offering a variety of products tailored towards them is at its best (Harrisson, 2017). By cost leadership strategy then the firm has to ensure its low-cost strategy is accompanied by better technology and increased working hours to guarantee low cost. The value chain must also have elasticities of scale. For a specific focus either cost or differentiation, then the firm has to package and produce the final output according to the needs of the target market.
Apple Inc. has maintained a competitive advantage over other firms in the same industry through the adoption of the product differentiation strategy. Its value chain activities have enhanced its product differentiation hence today its main strategy is to have a wide brand strength. It is known more globally unlike its competitors like IBM and Samsung. The firm through its differentiation ensures its more known than other firms (Linton, 2018). Also, its increased innovation over the years differentiates it from the other firm’s as it offers the best final output. Lastly, its premium pricing is distinctive hence many identify with it. Analysis of the competitive industry structure makes it easy for firms to choose the best strategy that beats all other firms.
References
Harrisson, K. (2017). What is a Value Chain Analysis?. Retrieved from https://www.businessnewsdaily.com/5678-value-chain-analysis.htmlLinton, I. (2018). What Is Apple’s Competitive Advantage in Its Industry?. Retrieved from https://bizfluent.com/info-8734236-apples-competitive-advantage-industry.htmlPorter, M. (1980). Competitive strategy. New York: Free Press.
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