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Practical Application: Porter's Generic Strategies

Instructor: Natalie Boyd

Natalie is a teacher and holds an MA in English Education and is in progress on her PhD in psychology.

The strategies companies use to gain a competitive edge shape the way they do business. This scenario will ask you to think about Porter's generic strategies and how they play out in business.

Porter's Strategies

Businesses are always looking for a competitive advantage. Porter's generic strategies are ways that companies seek to gain an advantage over their competitors. They include:

  • cost leadership strategy, which involves pricing products at a lower cost than a competitor
  • differentiation strategy, which involves making the brand unique in the eyes of consumers
  • focus strategies, such as targeting a specific market or trying to capture customers industry-wide

For more detail on Porter's strategies, check out the lesson Porter's Generic Strategies. Once you understand them better, take a look at the scenario below and think about what types of strategies the company should use.

Scenario

Klean Kars is a new company that provides hand washing and detailing service for cars. Klaus, the owner of the company, wants to hire many people and be the most successful clean and detail shop in town. He has two major competitors: Danny's Detail and Clean n' Go.

Danny's Detail specializes in cleaning and detailing luxury cars, especially foreign brands. They charge a lot of money, but their customers are willing to pay a lot to keep their very expensive cars clean. Plus, Danny's has a reputation for being a very exclusive company.

In contrast, Clean n' Go is a fast and cheap car wash and detailing company. They try to get as many people as possible to come to them by offering detailing for the lowest amount of money. They get people in and out quickly and try to get many different types of people (and cars) to come to them.

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