PERSPECTIVES ON STRATEGY AND STRUCTURE
PERSPECTIVES ON STRATEGY
AND STRUCTURE
Two perspectives on
strategy and structure are described here: One by Michael E. Porter (Competitive
Strategy, The Free Press, New York, 1980) and the other by Thomas J. Peters
and Robert H. Waterman Jr. (In Search of Excellence, Warner Books, 1982).
Porter’s Perspective
Porter has enunciated
three generic strategies: Overall Cost Leadership, Differentiation and
Focus. According to him the successful implementation of the three generic
strategies requires not only different resources and skills but also imply different
organizational arrangements, control procedures and inventive systems.
Overall cost leadership (common in 1970s in the USA) is achieved through a set of functional
policies culminating into what is popularly known as the Experience Curve Effect.
This strategy requires construction of efficient scale facilities, vigorous
pursuits of cost reduction from experience, tight cost and overhead control and
cost minimisation in areas like R&D, sales force, advertising and so on. A
great deal of managerial attention to cost control is necessary to achieve the
aims.
The differentiation
strategy implies offering a product or service by the firm which is perceived
in the industry as being unique. Differentiation can be approached in many ways
(one or more at the same time); product design features, brand image, technology,
customer services, dealer network and other dimensions.
The focus strategy means
concentrating on a particular buyer group, segment of product lines, or geographic
market.
As with differentiation,
focus may take many forms. Whereas the ‘low cost’ and ‘differentiation’
strategies aim at achieving their objectives industry-wise, the focus strategy
is built around serving a particular target very well. All functional policies are
geared in that direction. This strategy rests on the premise that the firm is
able to serve its narrow strategic target more effectively and efficiently than
those competitors who are engaged in broader activities.
We now turn our attention
to the organizational requirements for each strategy. Some common implications
of the generic strategies in terms of skills and resources and organizational
requirements are presented in Table -1 which are
self-explanatory.
Table -1 : Organizational
Requirements for Different Generic Strategies
