Tobest tackle this assignment, I will briefly describe porter’sstrategy and what consist of a hybrid and stuck in the middlestrategy. To begin with, Porter generic strategies were developed byMichael Porter, a professor at Harvard University. He stated thatthese strategies could be used by any organization to obtain acompetitive advantage. These are focus, cost leadership anddifferentiation (Porter, 1998):-
Inthe focus strategy, the organization will direct its resource onproducing a product for a particular environmental niche (Porter,1998). For instance, when the manufacturers of Bugatti car targetmusicians because they like fast expensive and classy cars and haveno problem purchasing them as they have the cash. The lifestyle is akey to determining the kind of product that organization using thisstrategy develops to satisfy the existing gap. The problems that aregreatly characterized by this strategy are that the market segmentmay not grow or can be affected by the change in lifestyle or time.
Costleadership, any organization using this strategy is either utilizinglow production cost or low price or sets the price that anotherorganization is providing similar product in the market follows forits product in the market. These advantages enable the organizationto attract a wide range of customers thus maximizing revenue in thelong run. For instance, if the organization was manufacturing carsbut it does not purchase steel it would have a cost leadershipadvantage over the same organization in the same industry thatpurchases steel.
Differentiationstrategy enables organizations to set themselves apart from otherorganization by adding value regarding branding, packaging servicedelivery or offering something different or additional from what ispreviously being offered by organizations in the market (Porter,1998). It is this uniqueness in products that drives consumers are topurchase a particular product or service. Originally a barber wouldshave only but today, one will shave, wash, massage, face scrapping,and offer hair treatment service. These are just a few ofdifferentiation services that are adopted by barber shops. Forinstance Coco cola coke mainly uses glass bottles with red labelscompared to Pepsi, which uses blue colored cans of its Pepsi drink.Both are carbonated drinks differentiated by packaging.
Secondly,increased competition contributed to advancement in technology hasmade an organization to be able to produce more quantity at a highquality. This has made many organizations adopt two strategies tomeet the demands of customers who want quality products at a lowprice. Organizations have to adopt strategies of differentiation andcost leadership to survive in this world of being the best or beswallowed. The adoption of both strategies is what called hybridstrategy.
Finally,Stuck in the Middle as the name suggest, an organization at thisstage are not sure which strategy to apply but use all of threeporter’s generic strategy. When the organization adopts thisstrategy, it is in limbo as neither concentrates on one strategy, andthus, the implementation of all these strategies becomesunderutilized. Thus, they suffer from unclear organization cultureand structure and motivational systems.
Ichose a various organization to help me with this assignment, Indiscussing differentiation I chose Blaze Pizza Inn, Coca-Cola andPepsi organizations, in elaborating cost leadership strategy I choseMc Donald’s and Wal-Mart, Toyota to elaborate hybrid strategy andNokia organization to elaborate stuck in the middle.
BlazePizza is an organization that sells pizzas it has differentiateditself from others key business players by allowing customers toorder pizza according to their specifications. Pizzas are not readymade on a large scale except only common deserts. They use freshingredients and dough and cook their pizzas with fire instead ofconveyors ( Albritton,2014). They have additionally trained youngemployees to suit and best their market which is the youth. Tocounter their lack of delivery services they have situated theirstore near shopping center and school and greatly use interactivemarketing. Another differentiation strategy is the adoption ofcelebrities as investors such as LeBron James to appeal to massesthat associate themselves with that celebrity (Business Insider,2015).
Globallydifferentiation can be elaborated well by use of Coca-Cola and PepsiCoke and Pepsi products respectively. Both organizations sellcarbonated drinks, but they have tried to reach the market throughdifferent packaging brands and slogans as if what they sold wasunrelated. Pepsi in its market strategy has mainly targeted the youthwhile Coke is a target all the population. Color blue is mainlyassociated with Pepsi drinks while red is the choice color for cokedrinks made by Coca-Cola. Also it easier to find bottled cokebeverages compared to Pepsi, which majors with cans packaging (Dharet al., 2005). Even the size packaging of coke products, like 1-literpackagings encourage family come together, while six pack can be thepackaging of Pepsi, encourage sharing but not necessary enjoying thedrink in the companion of the one you shared with. For instance, Imay decide to give a friend a can of Pepsi but not stay there to havemine as she takes hers on the other hand when coke beverage is servedfrom the bottle to my glass in the dining room I will have it with myfellow siblings and parents.
Lowprice and low-cost strategies fall into the category of costleadership competitive advantage strategy. These strategies have wellbeen used by an organization like Wal-Mart and McDonalds. Wal-MartStore Inc. mainly deals with selling wide varieties of commodities,from electronics, baby gear, household commodities and outdoor ones.In their mission, they have stated how they offer their qualityservices and products at low prices compared to their competitors(Stankevičiūtė et al., 2012). This is made possible due toeconomies of scale any business person knows that thoseorganizations that purchases commodities at high volume alwayspurchase them cheaply. Thus, this factor allows Wal-Mart to acquirecheap domestic supply and source products from foreign markets withlow wages hence their final products and services will be cheapercompared to other business competitors (Stankevičiūtė et al.,2012). In the long run, high sales volume will translate to highrevenues.
Anotherorganization that uses cost leadership strategy is the McDonalds therestaurant offers the most basic fast foods, at least, pricescompared to other competitors in the same market. They utilize thisstrategy through the division of labor under few managers thus savingon the cost of paying high wages also instead of hiring trainedcooks they hire untrained personnel and train them thus reducing thecost of associated with hiring an already professional cook (Baack &Boggs, 2008).
Applicationof Hybrid Strategy
Hybridmeans something greater powerful this strategy can be best explainedby how Toyota uses its marketing strategy in trying to achieve acompetitive advantage over the other organization in the automobileindustry (Baroto et al., 2012). In differentiation, the Toyotaorganization produces many vehicles that suit different customerneeds thus satisfy the rich class and the middle class. For instance,the Corolla Toyota makes are cheap to make and acquire as the companysells them affordable prices. The ability to make a vehicle thatsuits every population class makes it easy for the Toyota Company tostay at least one step ahead of its competitors. Toyota has alsodeveloped vehicles that can with the stand harsh weather rough roadscondition, its hybrid models are designed in a way that iseco-friendly encouraging its consumers to practice procedures thatencourage promote the environment.
` Anotherstrategy that Toyota has adopted is the make of vehicles that do notuse a lot of fuel, compared to other vehicles in the same marketniche. These differences in vehicles make the Toyota industry tocover a wide market. Besides differentiation, Toyota also appliescost leadership strategy of low cost to achieve a competitiveadvantage. This can be better explained by Michael Porter quote(1998) “Toyotaadopts the low-cost producer in the automobile industry. It achievesthis strategy by control of suppliers, careful choice, efficientproduction, lean production and low servicing costs”.So when Toyota offers high-quality vehicles at the low price becauseit can source its supplies cheaply, it adopts the cost leadershipstrategy same when its garage outlets or service outlets providequality services. The adoption of these two strategies is whatconsists of a hybrid strategy (Baroto et al., 2012).
Stuckin the Middle
Stuckin the middle is applied by organizations that are not sure whichstrategy of the three generic strategies to use, these organizationcan be best characterized by Nokia organization (Bruner, 2012). Evento date, it is not easy to clearly point out to what key strategyNokia organization uses to date. Nokia products are not cheap, andare not focused on different markets. This makes organizationapplying this strategy not to utilize any of the strategieseffectively thus making the organization to stagnate at the samelevel (Bruner, 2012). This strategy has affected Nokia expansion rateas other organizations are growing such as Samsung and Apple itsproducts today are being bought but the I suspect the profit marginsof Nokia are not that good and the reason it had merged withMicrosoft. The best way to determine growth in this industry isthrough investment and expansions which are minimal with Nokiaindustry. This strategy is the worst that a business can applyaccording to me. I believe that any business that is formed intendsto succeed. The worst problem associated with this stage is that itless attracts customer and organization revenues can dwindle greatly.Innovation can aid businesses that are stuck in the middle to pulloutof this stage.
Frommy point of view, I feel that Porters generic strategies are key inany business that wants to succeed in the market. A business manageror management department should decide on which strategy best suitsits organization and apply it. Though Porters feels that having onestrategy is the best as it allows the organization to concentrate itsresources on one mission, I feel that a lot has changed since 1980when this competitive strategy was put forward. Today there numerousadvancement in technology and innovation in the organization inbusiness which allows the organization to offer quality products andservices and low cost.
Thus,organizations can utilize the cost leadership and differentiationstrategy, a strategy referred as hybrid strategy or the 21st-centurystrategy. If any business does not apply this strategy now or infuture there highly likelihood it will crush. The hybrid strategyproves to be productive if it is well implemented and the managementdepartment dedicates resources diligently. Technology is acontributory to this strategy thus organizations need to set asidethink tank department whose job is to focus ahead on possible issuesthat might result or affect business in future.
Theworst strategy is stuck in the middle, as the name suggests theorganization does not know what direction to head to. Lack of clearand distinct strategies can affect the profit margins of thisorganization and id development in future. As a manager, this is theno-go stage for an organization and once you realize that you arehere as an organization is a time to re-strategize, re –invent andreposition yourself in the market and focus on a strategy that bestsuit that organization.
Thebusiness field keeps on changing, and more research should be done tocome up with the best strategies that give an organization acompetitive strategy. Every decision today need to be evaluated fromtechnological perspective because that is the king maker today.
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