to establish and exploit a competitive advantage within a particular compet-
itive scope (Figure 2. 7 )
Figure 2. 7 : Porter’s competitive strategiesCompetitive Advantage
Low Cost UniquenessCompetitive Scope(^) Broad
target
Low Cost leadership
e.g. Wal- Mart
Differentiation
e.g. Tommy Hilfiger’s apparel
Narrow
target
Focused low – cost leadership
e.g. Rent A Wreck cars
Focused differentiation
e.g. Mountain Equipment Co-operative
Source: Adapted from Porter (1985) competitive Advantage, New York: Free
press page 12
Miles and Snow (1984)^23 have identified four modes of strategic orientation:
defenders, prospectors, analyzers and reactors. Defenders are companies
with a limited product line and a management focuses on improving the
efficiency of their existing operations. Commitment to this cost orientation
makes senior managers unlikely to explore new areas. Prospectors are
companies with fairly broad product lines that focus on product innovation and
market opportunities. These sales orientation makes senior managers
emphasize 'creativity over efficiency- Analyzers are companies that operate in
at least two different product market areas, one stable and one variable. In
this situation, senior managers emphasize efficiency in the stable areas and
innovation in the variable areas. Reactors are companies that lack a
consistent strategy-structure-culture relationship. In this reactive orientation,
senior management's responses to environmental changes and pressures
thus tend to be piecemeal strategic adjustments. Competing companies within
a single industry can choose anyone of these four types of strategy and adopt
a corresponding combination of structure, culture and processes consistent
with that strategy in response to the environment. The different competitive
strategies influence the 'downstream' functional strategies.