The business theories are in continuous evolution and attend to the reality of the new business systems, among those considered experts of the Business Sciences, is Michael Porter, who is a professor at Harvard Business School and who has developed a theory on the generic strategies that businesses can adopt when offering their services or products to turn them into the profitable.
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In this article you will find:
Porter's Generic Strategies Matrix
For Porter, there are only two main strategies for companies:
One of them consists of obtaining products or services much smaller than those offered by the competition, this strategy can be achieved by buying raw Materials at a lower amount, through the use of resources or means with which costs are reduced, through economies of scale or through other similar processes with those that get the consumer to have the perception, real or not, that he will not find a lower price in a service or product similar to that offered by the company.
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The alternative is to offer "exclusivity" in this case, the important thing is not that the customer focuses on the price, but rather that he is aware that by choosing the product or service that the company offers, it will be able to distinguish itself from most consumers and access services "extra". Therefore, in this case we would speak of a company leader in differentiation. Exclusivity can be achieved through the most varied strategies, but in all cases the ultimate goal is to get the buyer to value and accept as good to pay a higher price.
From these two generic strategies, however, others could be derived, although with certain limitations when applying them. Thus, according to the theories of generic porter's strategies, it would be impossible to be both a leader in costs and a leader in exclusivity, in this case the Harvard Professor indicates that there would be the danger of ending up somewhere between the two objectives without being able to reach any of they.
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Porter's Market Approach and Generic Strategies
Generic strategies are well defined by Michael porterBut, despite this, there are experts who agree on the importance of these, but also on the chosen market approach. Choosing an entire sector or dividing a segment towards which to derive generic strategies is considered a strategy in itself by many authors.
In any case, Porter argues that it is important to choose one of these two objectives and to plan well the means to achieve it, since this is the key to maximum business profitability, those companies that do not manage to to be cost leader or leaders in differentiation will hardly be able to have a satisfactory financial development.
We must not lose sight of the fact that, for Michael Porter, business success does not only lie in being leaders in the sector and, on the contrary, he defends that obtaining the leadership in a business sector it can be considered successful even when you do not have control of the entire market.
