Michael Porter's Model Case Study

Critically analyse Michael Porter’s model of generic strategies. Provide case study examples for each of the three generic strategies and suggest how companies might implement alternative strategies.
Introduction
The attractiveness of the operating environment in which the company is in is the main determinant of a firm’s productivity and its financial performance. A significant secondary determinant is how the company has positioned itself within the industry. A firm positions itself by leveraging its strengths. According to Porter (Porter, 1996) a company’s strengths in the long run could be categorised into to two namely cost leadership and differentiation. Taking the broad and narrow scope of these strengths into consideration Michael

If a company cannot decide what level of industry to consider, it is not possible to use this theory.
 Strategic unit not defined- Porter’s model can be used as a tool to evaluate a firm’s competitive strategy against other firms in the same industry. However there is lack of clarity as to this comparison can be done considering the corporation as a whole or whether it is one particular business unit. This can cause problems since Michael porter has stated that having more than one competitive strategy could dilute the competitive advantage of a firm.
 Lack of empirical evidence- Porter’s model purports to be more than a system of classification. It makes predictions that particular strategies will lead to better profitability and that a stuck in the middle strategy will cause poor profits. However there can be companies adopting stuck in the middle strategies. For an example people do not only live in tents and palaces, eat either rice or chocolates and travel by only by bicycle or limousine. In most instances the customers are attracted to the middle in search of acceptable quality and affordable

These firms could either sell their product and services in the market for average industry prices which will enable the firm to earn a high profit margin than its rivals or below the average price to attract more customers and increase its market share. Adopting this generic strategy will enable a firm to successfully face a price war since the firm can maintain some profitability while the competition is suffering a loss. Firms that produce cheaply will remain profitable for a longer period of time even when the industry matures and the prices