Leveraging a Generic Strategy
Leveraging a Generic Strategy
Daryl Roscoe
Grantham University
Leveraging a Generic Strategy
The three generic strategies that have been described by Michael Porter are segmentation, differentiation strategy, and cost leadership strategy. The best example of an organization that has established sustained market leadership by successfully leveraging a generic strategy is WalMart. After you arrive at any WalMart, you will see that the prices are much lower than any of the other competitors. WalMart has positioned itself by leveraging their strengths. They have applied these strengths in a very broad or narrow focus. The generic strategy calls for being a low cost producer. WalMart sells its products at or below the competition prices while gaining overall market share. Even when the competition tries to match or reduce their prices, WalMart can maintain some profitability while the competition can’t. Over the next pages, I will be discussing the strategies involved.
Cost Leadership Strategy. WalMart is an American owned multinational corporation that runs the largest discount stores and warehouses. They are the world’s second largest corporation and the biggest private employer in the world. WalMart employs over two million employees and remains a family-owned business. WalMart Stores, Inc. operates retail stores in various formats around the world and is committed to saving people money so they can live better. The company earns the trust of customers every day by providing a broad assortment of quality merchandise and services at everyday low prices (EDLP) while fostering a culture that rewards and embraces mutual respect, integrity and diversity. EDLP is the company’s pricing philosophy under which they price items at a low price every day so that the customers trust that the company’s prices will not change under frequent promotional activity. WalMart is engaged in the operations of retail stores located in all 50 states of the United States and many countries outside the U. S.
One of the ways WalMart has acquire cost saving advantages has been improving the process efficiencies. WalMart is successful in managing its own supply chain. They use a very reliable supply chain management systems that tracks all products to and from the manufacturer, to the warehouse and then on the stores shelves. The efficiency in the system saves WalMart millions of dollars and prevents losses of their products. WalMart open stores outside of large cities and within 200 miles of existing stores. Doing so keeps distribution costs below average.
WalMart can buy its products at the lowest levels while exchanging the high purchase volumes for the low cost. This keeps the suppliers bargaining power very minimal.