How Relevant Today Are the Three Generic Strategies of Focus, Cost, And Differentiation?

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Having lived, worked, and explored various parts of the world, I’ve noticed a common thread that unites people across continents: their love for burgers. Burgers, for many, represent the epitome of fast food. This global appeal of burgers is not just a culinary phenomenon but also a strategic one. How does this relate to your business strategy?

You have probably heard about the three generic business strategies of focus, cost, and differentiation. Michael Porter launched them in the 1980s, and they are still relevant for your business today: the fact that you sell burgers, how you sell them, and who decides not to sell burgers can make a big difference in your business strategy and the choices you make.

McDonald’s is a classic example of operational excellence, reducing costs and making it a cost leader in the industry.

On the other side of the street, you can get to Subway, which bases its strategy on differentiation: the same loaf of bread with vegetables and meat in the Subway branch seems different from the one at the McDonald’s counter, yet they are similar products.

Finally, you’ll find local gourmet burger restaurants offering customers more delicious burgers and choices. These restaurants chose to serve only the narrow market of their cities. Not all customers want to try their burgers. If you find them in their shop, most will probably go to one of the two restaurants in town.

All three generic strategies involve irreversible trade-offs between the type of product sold, the target market, and the features on offer. You should address these long-term constraints by embracing them or finding your way.

Do you want to survive in the “red ocean” of competition bloodshed or prefer to swim and sail in a clear blue ocean? Do you choose the constraints that support your business survival or broaden your vision and bring creativity to your business, venturing into the infinite blue ocean that keeps you solid and stable?

Blue Ocean practitioners will tell you that your entrepreneurial ambition is to understand your customers’ needs, analyse your competitors’ offerings, look at your non-customers, and find new dimensions of the open market yourself.

They swim in an infinite blue ocean without making compromises and winning without competing.

 

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