Page 35 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes
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Caution A focus strategist must beware of events that could impact the target market. This
can happen when broad-line, multi-segment competitors may find effective ways to match
the focused firm in serving the narrow target market, or the segment may become so
appealing that it is soon crowded with eager, aggressive rivals, causing segment profits to
be split.
Often, the niche buyer’s preferences and needs drift more and more towards the product
attributes desired by the market as a whole; this could be threatening. The focus strategy
always implies some limitation on the overall market share achievable. The strategy
involves a trade-off between profitability and sales volume.

2.2.4 Some Aspects of Generic Strategies

The three generic strategies differ on many dimensions. Implementing them successfully requires
different resources and skills. These have been summarized in the Table 2.1. Organizations
pursuing different strategies will find that they attract different sorts of people. This should
result in different styles of leadership that can translate into different corporate cultures and
atmospheres.

Table 2.1: Summary of Generic Strategies

Generic Strategy Required Skills and Resources Organizational Requirements
Cost Leadership - Sustained Capital Investment - Tight cost control.
capability and access to Capital.
- Frequent, detailed control reports.
- Process Engineering Skills.
- Structured organization and
- Intense supervision of labour. responsibilities.
- Product designed for ease in - Incentives based on meeting strict
manufacture. quantitative targets.
Differentiation - Strong marketing abilities. - Strong coordination among
functions in R&D, product
- Product engineering.
development and marketing.
- Creative flair.
- Subjective measurement and
- Strong capability in basic incentives instead of quantitative
research. measures.
- Reputation for quality or - Amenities to attract highly skilled
technological leadership. labour, scientists or creative people.
- Long tradition in the industry or
unique combination of skills from

other areas.
- Strong cooperation from
channels.
Focus - Combination of the above, - Combination of the above, directed
directed at the particular at the particular strategic target.
strategic target.

If the organization is in a position where it is between the three strategic options, it usually takes
time and sustained effort to come out of this position.
In spite of the fact that successfully executing each generic strategy involves different resources,
strengths, organizational arrangements, and managerial style, some organizations try to flip

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