Michael Porter - Sample Essay

Since Non-stop Yacht is a an e-commerce business concentrate more on promoting and selling products thru the internet. Instant access to current product information can eliminate many problems associated with parts procurement encountered by the captains, crews and owners of mega-yachts. The way NSY promote and sell their product is their competitive advantage. Thou it is a risky business approach because there is a big chance that NSY can just be a source of information for captains, crew and owners and they don’t gain any sales in return because these people buy product from local distributors located in ports or yacht docks.

The marketing strategy of NSY can help the company boost its sales and succeed in the yacht industry. Economies of scale have driven much of business history over the past years. Large companies have provided a tremendous range of goods and services to consumers at reasonable prices. But the concentration of power and profits among the largest players in an industry can be quite significant (Gorman 2003 p. 129). Capital intensiveness, volume buying, administrative efficiencies, distribution, market power are factors that affect the increase in the economies of scale.

Every industry has a set of best practices that are more or less known to established firms. New dot coms will be at a disadvantage unless they can redefine the industry’s best practices and leap frog existing firms. TASK 2 Explain what is meant by a ‘generic competitive strategy’ and describe the characteristics and differences between the five types of generic strategy identified by Michael Porter. There are three generic competitive strategies according to Michael Porter. They are differentiation, cost leadership and focus (Clarke 2001 p. 1992).

Along with these three generic competitive strategies, Porter defined them along with two dimensions namely: strategic scope and strategic strength. . Strategic scope is a demand-side dimension and strategic strength is a supply-side dimension. The low cost provider strategy targets broad section of the market by producing products with low frills (acceptable quality and limited selection). Its emphasis is on searching ways to continuously reduced cost of the product without sacrificing acceptable quality and essential features. Trying to make virtue out of product features that lead to low cost.

Economical prices, good value and striving to manage cost down year after year in every areas of the business is the to sustaining strategies. Like the low cost provider the strategic market of this strategy are the broad cross section of the market. The competitive advantage of this strategy is the ability to offer buyer something different from competitors. There is a wide selection of product and product lines with emphasis on differentiating features. The emphasis of the product is built on whatever differentiating features that the customers are willing to buy or pay for.

Emphasizing the products’ superiority is very important. The marketing emphasis is on advertising the differentiating features. They key in sustaining this kind of strategy is stressing constant innovation to stay ahead of imitative competitors and concentrate on the few keys of differentiating features. Best Cost Provider This targets those value conscious buyers. The basic competitive advantage of this strategy is its ability to give customers more value for their money. Company that uses this strategy offers product with attractive attributes and with assorted upscale features.

Its product emphasis is on building an upscale feature and appealing attribute to their products with lower cost than rivals. They advertise delivery of the best value. They compete with their competitors by offering customers best value through low pricing or better features. The key to sustain this kind of strategy is the unique expertise in simultaneous managing cost down while incorporating upscale features and attributes. Focused Low Cost Provider The strategic target for this strategy is narrow market niche where buyers needs and preference are distinctively different.

The cost is low and the features and attributes of the products are tailored to the taste requirements of the niche members. The company that uses this kind of strategy always strive hard to continuously search to reduce cost while incorporating features and attributes matched to the niche members preferences. It is also important to communicate the attractive features of the budget-priced product offering. The key to sustain this kind of strategy is to stay committed to serve the niche at lowest overall cost.