1, leading the total cost (leading the total cost)
Cost leadership requires resolutely establishing efficient production facilities, making every effort to reduce costs on the basis of experience, grasping the control of costs and management expenses, and minimizing the costs of research and development, service, promotion and advertising.
In order to achieve these goals, we should attach great importance to cost in management. Although quality and service can not be ignored, the whole strategy is to make the cost lower than the competitors. The company's low cost means that when other companies have lost profits in the competition, this company can still make profits.
Winning a favorable position at the lowest total cost usually requires a higher relative market share or other advantages, such as a good connection with raw material supply. It may also be required that the product design should be convenient for manufacturing and production, easy to maintain a wide range of related product lines to share fixed costs, and serve all major customer groups in order to establish a batch.
2, differentiation strategy (difference)
The differentiation strategy is to differentiate the products or services provided by the company and establish something unique in the whole industry. There are many ways to realize the differentiation strategy: designing famous brand image, technical uniqueness, performance characteristics, customer service, commercial network and other uniqueness. Ideally, the company has its differentiated characteristics in several aspects. For example, Caterpillar is famous not only for its commercial network and excellent spare parts supply service, but also for its high quality and durable product quality.
If the differentiation strategy is successfully implemented, it will become an active strategy for an industry to win high-level income, because it has established a defensive position to deal with five competitive forces, although its defensive form is different from cost leadership. Porter believes that the implementation of differentiation strategy sometimes conflicts with the activities of striving for greater market share. The implementation of differentiation strategy often requires enterprises to be psychologically prepared for the exclusiveness of this strategy. This strategy cannot be balanced with the growing market share. The activity of establishing company differentiation strategy is always accompanied by high cost. Sometimes, even if customers in the whole industry know the unique advantages of the company, not all customers will be willing or able to pay the high price required by the company.
3. Focus strategy.
Specialization strategy is to focus on a special customer base, a subdivided product line or a regional market. Just like differentiation strategy, specialization strategy can take many forms. Although both low-cost strategy and differentiation strategy are aimed at achieving their own goals in the whole industry, the whole specialization strategy is centered on serving a special goal well, and every functional policy it formulates and implements should consider this central idea. The premise of this strategy is that the specialization of the company's business can serve a narrower strategic target with higher efficiency and better effect, thus surpassing competitors competing in a wider range. Porter believes that the result of this is that the company has achieved differentiation by meeting the needs of special objects, or achieved low cost in serving this object, or both. Such a company can make its profit potential exceed the general level of the industry. These advantages protect the company from the threat of various competitive forces.
Extension of knowledge points:
"Competitive Strategy" was put forward by American scholar Porter, the world's first strategic authority and known as "the father of competitive strategy", in his book "Competitive Strategy" published in 1980. It belongs to a kind of enterprise strategy, which refers to the long-term behavior of enterprises to attack or defend in the competition with the same use value. Porter provides three effective competitive strategies for business people, namely, total cost leading strategy, differentiation strategy and specialization strategy.