Industrial Case Study
Industrial Case Study
Industrial Case Study
Abstract: Porter’s model to approach market with specific strategy is most accepted strategy model in
domestic ,regional,international & global markets. In recent years it has been observed that although one can
apply this model as generic guidelines for approaching various markets but at times marketing team has to use
combination of cost leadership ,differentiation& focus strategies to win some specific projects/new business.
This combination decision can be based on continuous review of existing strategy &it’s outcome (business
results). In this article experience,observations & results has been shared based on variation in market strategy
approach pertaining to supply of specialty lubricants to one of the large power sector company in India.
Success story of combination strategy (Integrated Strategy: both cost leadership& differentiation strategy) has
been shared to make it more evident.
I. Introduction
1.1 Strategy Concept
Strategy is first and foremost a broad and complex concept. In an attempt to provide a definition,Porter
(1996) states: “Strategy is the creation of a unique and valuable position, involving adifferent set of
activities.”15 The essence of strategic positioning is to choose activities that yieldsuperior profitability because
they are different from rivals’ and thus create a sustainablecompetitive advantage. Note that a competitive
advantage is not necessarily enduring,which iswhy strategy must be distinguished from operational effectiveness
(OE). Both elements cangenerate competitive advantage, which improves performance, but OE is relatively easy
toimitate and, consequently, the competitive advantage risks eroding. In fact, Saloner, Shepard &Podolny
(2001) mean that the major threat to the sustainability of a competitive advantage is thatrivals can diagnose and
duplicate or make obsolete the competitive advantage.
1.Overall cost leadership:Low cost relative to competitors is the theme running through the entire overall cost
leadershipstrategy and the objective is clearly overall industry cost leadership. Attaining cost leadershiptypically
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requires aggressive construction of efficient scale facilities and vigorous pursuit of costreductions through
experience, tight cost and overhead control, avoidance of marginal customeraccounts, and cost minimization in
areas like R&D, service, sales force, advertising, etc. Whenattempting to achieve an overall cost leadership
position, low cost relative to competitors is thetheme running through the entire strategy.
3.Focus:Considering that this paper focuses on the combination of between overall cost leadership and
differentiation, it does not serve the purpose of the paper to describe the focus strategy in detail.In brief, the
focus strategy aims at serving a particular target or segment of the industry well, asopposed to both overall cost
leadership and differentiation strategies seek to achieve theirobjectives industry-wide.
(Figure 1)
Source:B.V.P.M. (2005)
All three strategies have the potential to result in above-average profits; however, all three strategies
may not be equally suitable for a firm. The reason is that the three strategies differ on anumber of dimensions
and pose different requirements, for example in terms of resources, skills,organizational arrangements, control
procedures, incentive systems and management style.Profitability may vary depending on the wellness of fit
between the firm and the selectedstrategy, which make the decision of which strategy to adopt key to the
benefits of strategicplanning and requires that the choice be well founded. The challenge lies in selecting the
strategythat best suits the firm’s strengths and resources and is least replicable by competitors and this inturn
necessitates knowledge about the firm, its business environment and competitors. With anexplicit technique for
analysing industry structure and competition, practitioner may gain betterunderstanding and knowledge of both
elements. Porter’s (1980) model facilitates the decisionmakingprocess and improves the probability for a firm
that chooses an appropriate strategy.
-Product positioning advantage of being OEM preferred product & higher technical specifications compared to
competition product which they selected for phase –I were leveraged .
- Clearly expressed willingness to offer competitive price but also highlighted benefits & technical services
being offered.
-Contentious evaluation & follow up were taken on competition supply process, after sales services ,product
performance etc. to formulate combination strategy approach for next selling cycle.
V. Conclusion
We have applied single strategy ( differentiation strategy) approach as per Portr’s model in one
business cycle of the project which resulted in business loss opportunity. After analysing the situation &
considering future similar business opportunity we changed our strategy approach & worked on combination
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