Porter’s Competitive Strategies

A take into the service sector

By Ankita BaidSt.Xavier’s College,Kolkata

PGDMSM

Introduction

Michael Porter is a professor at Harvard Business

School.

A firm’s success in strategy rests upon how it positions

itself in respect to its environment.

Michael Porter has argued that a firm's strengths

ultimately fall into one of two headings: cost advantage

and differentiation.

By applying these strengths in either a broad or narrow

scope, three generic strategies result: cost leadership

differentiation, and focus

Cost Leadership

• Superior profits through lower costs.

Differentiation

• Creating a product or service that is perceived as being unique “throughout the industry”

Focus

• Concentrating on a limited part of the market.

Competitive Strategies

Porter’s Competitive Strategy

Target ScopeAdvantage

(Low Cost)

Advantage

(Product Uniqueness)

Broad(Industry wide)

Cost Leadership Differentiation

Narrow(Market wide)

Focus Strategy(low cost)

Focus Strategy(differentiation)

Cost Leadership Strategy

Strategy where a firm tries to become the low-cost

producer in an industry

The firm could lower selling price and still make profits,

though emphasis is on lower costs and not low selling

prices

Targets a broad market.

As industry matures & prices decline, firms that can

produce cheaper will remain profitable for a longer

period of time

During price war, firm is profitable while competition

suffers losses

Especially beneficial : where customers are price

sensitive

Differentiation Strategy A differentiation strategy calls for the development of a

product or service that offers unique attributes that are valued by customers.

Customers perceive the product to be different and better than that of rivals.

The value added by the uniqueness of the product may allow the firm to charge a premium price for it.

Differentiation can be based on product image or durability,after-sales,quality,additional features.

Differentiation can lead to profitability, but not high market share

Focus Strategy

The focus strategy concentrates on a narrow segment, particular niche market - particular buyer group, segment of the product line, or geographic market .

Within that segment attempts to achieve either a cost advantage or differentiation.

The premise is that the needs of the group can be better serviced by focusing entirely on it.

A firm using a focus strategy often enjoys a high degree of customer loyalty.

However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist.

Service Sector Selected

Entertainment Industry: Bollywood

Cost Leadership:Nawazuddin Siddiqui

Why Nawazuddin Siddiqui?

He is a low cost actor Performed in Low budgeted films Most of them were a hit at the box office Widely accepted by the audience Even though cost is low no compromise in

quality Acting skills are excellent

Notable Contribution to the Industry

Peepli Live is a 2010 Indian satirical comedy film that explores the topic of “farmer suicides" and the subsequent media and political response.It is a multi starrer film.Siddiqui played the role of a journalistBudget:10 croreCollection:40 crore

Kahaani is a 2012 Indian Hindi mystery thriller film. Vidya balan played the protagonist and Siddiqui played Supporting Actor as an IB Officerand won the special jury award for it.Budget:8 CroreCollection:78 crore

Gangs of Wasseypur is a 2012 Indian two-part crime film centered on the coal mafia of Dhanbad, and the underlying power struggles, politics and vengeance between three crime families.Nawazuddin Siddiqui won the special jury award for itBudget:18 croreCollection:50 crore

Nawazuddin Siddiqui has worked in many other movies with other big stars for eg: Aamir Khan in Talaash and won the award for Best Supporting Actor. Although Siddiqui himself is not a big name in the industry but his work has always proven his mettle. Even though he has featured in low budgeted films but those films have not ceased to leave their mark with a special mention to Siddiqui.Explaining this Analogy with Nazauddin Siddiqui as a Cost leader is thus significant in understanding of Cost Leadership under Porter’s Competitive Positioning Strategies.

Differentiation: Priyanka Chopra

Why Priyanka Chopra?

Priyanka Chopra is an Indian actress, singer, philanthropist.

The winner of the Miss World 2000 pageant. One of the highest-paid actresses in the world One of India's most popular celebrities and versatile

actress and performed both in Bollywood and Hollywood

Chopra has also gained recognition for her sense of style.

She has received numerous awards, including a National Film Award, and five Filmfare Awards, and was awarded the Padma Shri, the fourth highest civilian award, by the Government of India in 2016. That same year, Time named her as one of the 100 most influential people in the world

Notable Contributions to the Industry

Chopra gained recognition for her versatility in portraying a range of unconventional characters in the films:

Aitraaz (2004) Kaminey (2009), 7 Khoon Maaf (2011), Barfi! (2012), Mary Kom(2014), Dil Dhadakne Do (2015), Bajirao Mastani (2015),

Entry into Hollywood

In 2015, she began starring as Alex Parrish on the ABC thriller series Quantico, becoming the first South Asian woman to headline an American network series.

She will be starring in May2017 release Baywatch with Dwayne Johnson, popularly known as The Rock from WWE

She has also sung hollywood songs like "Exotic" featuring American rapper Pitbull, “In My City” and “I Can’t Make you Love Me”.

Priyanka Chopra is thus the most versatile actress in the industry as she has performed such different characters and has improved tremendously over the years. Her entry into hollywood has also been very significant with Quantico. Her Unique characters in different movies in addition to her venture into hollywood singing has made her quite a differentiator.

Explaining this Analogy with Priyanka Chopra as a differentiatior is thus significant in understanding of Differentiation under Porter’s Competitive Positioning Strategies.

Focus: Irrfan Khan

Why Irrfan Khan?

Irrfan Khan is an Indian film actor known for his works predominantly in Hindi cinema. He is also known for his works in British films,and Hollywood. Film critics, contemporaries, and other experts consider him to be one of the finest actors in Indian cinema for his versatile and natural acting. In 2011, Khan received the Padma Shri, India's fourth highest civilian honour for his contribution to the field of arts.

There are a particular segment of people who recognize and appreciate his works. As he has mostly performed in serious or art films he has got a particular segment of fan following. His movies may not be liked by the masses in general.

Notable Contribution to the Industry

Paan Singh Tomar is a 2012 Indian biographical film based on the true story of the athlete Paan Singh Tomar. A soldier in the Indian Army, he wins a gold medal at the Indian National Games, but is forced to become a notorious bandit. He received National Film Award for Best Actor for this film.

The Lunchbox is a 2013 Indian epistolary romantic film with Irfan Khan as the lead actor. The film was quite unusual and ended on a very abrupt note. Most of the audience might have not understood the movie but still the movie received several awards. These type of movies have a particular segment of audience who like and appreciate them.He received Asian Film Award for Best Actor for this film

Piku is a 2015 Indian comedy-drama film directed by Shoojit Sircar. It stars Deepika Padukone, AmitabhBachchan and Irrfan Khan. It tells the story of the short-tempered Piku Banerjee (Padukone), her grumpy, ageing father Bhashkor (Bachchan) and Rana Chaudhary (Khan), who is stuck between the father-daughter duo, as they embark on a journey to Kolkata.He received Best Actor award at the Indian Film Festival of Melbourne for Piku

He has performed in international films, such as Life of Pi, New York -I Love You, The Amazing Spider-Man and Jurassic World, with a featured role alongside Tom Hanks in the 2016 adaptation of Dan Brown's novel Inferno.

Last Year, he was seen in a video by the AIB-The Party Song which was released only on You Tube. The video has got 86,69,967 views till date. The video was a hit among the youngsters. These types of songs will not be liked by the people from higher age groups. This song was targeted only for the internet users and more specifically the youth.

Explaining this analogy with Irrfan Khan under focused or niche category is thus significant in understanding of focus under Porter’s Competitive Positioning Strategies.

Conclusion

In 1980s when this concept was formulated, the environments were relatively stable there was no requirement for flexibility in business strategies.

After eleven years Porter revised his thinking and accepted the fact that “hybrid business strategy” could exist.

The highly volatile and turbulent market conditions will not permit survival of rigid business strategies

Depending on the market and competitive conditions hybrid strategy should be adjusted regarding the extent which each generic strategy (cost leadership or differentiation or focus) should be given priority in practice.