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49. Competitive advantages in the theory of M. Porter. Three Typical Competitive Strategies
M. Porter, based on an analysis of more than 100 industries and sub-sectors from 10 countries, comes to the conclusion that the international competitive advantages of national firms operating in these industries and sub-sectors depend on the macro environment in which they operate in their own country.
macro environment is determined not only by factors of production, but also by the nature of demand in the domestic market, the development of related and related industries, the level of management and competition in the country, as well as the economic policy of the government and even random events (war, unexpected inventions, etc.). The combination of these six main parameters (especially the first four, which Porter calls determinants) determines the competitive advantage of firms. In the general system of determinants of competitive advantages, M. Porter also includes the role of random events that can either strengthen or weaken the country's existing competitive advantages. The government's role in shaping national competitive advantage is to exert significant influence on all major determinants of the "national diamond".
For a manufacturing enterprise, there are mainly three strategiesthat lead to profit:
1. An enterprise (one or with several competitors) can conquer the market by selling a large number of products, producing them at minimal cost and selling at low prices;
2. The product and enterprise are distinguished from other competitors by special features for which buyers are willing to pay. It can be a better appearance, better functioning, better service, etc. Such features are called USP (Unique Sales Proposition) and promise a good sales prospects for the product.
3. For small and medium-sized enterprises, selective market treatment is recommended as an alternative strategy, achieving price leadership in certain small market segments or offering solutions to problems in such segments. With a small volume of sales and high prices, attempts to compete with suppliers of mass goods are futile.
Competitive Strategies:
1. Handling large market segments. Assumes:
a) problem solving - differentiation in the narrow sense (solving problems in large segments by creating a USP);
b) cost and price leadership
2. Processing of market niches (small segments) - selective processing of the market:
a) suggesting means of solving problems in the niche;
b) price leadership in the niche.
Author: Ilyina V.N.
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