Integrated Strategic Alternatives

Porter highlighted the idea that only one strategy, from the three generic business strategies, should be adopted by a firm and failure to do so will result in them being “stuck in the middle”.1

He argued that there is a risk of losing direction for the organisation when practising more than one strategy. Porter stated that to be successful at multiple strategies, firms frequently create separate business units for each strategy. By separating the strategies into different units having different policies and even different cultures, it is less probable that a firm becomes “stuck in the middle”.

Nevertheless, a single generic strategy is not always the best answer since the customers within the same product frequently look for multidimensional aspects, for instance a mix of quality, style, utility, and price.

A high quality producer that closely followed a single strategy can be surprised and suffers deeply by the entrance in the market of a new firm with a lower-quality product that better met the overall customers´ needs. Additionally, there is contemporary evidence (Proff, 2000) on firms practising a "hybrid strategy" (low cost and differentiation strategy) with success, doing even better than the ones adopting one generic strategy and resulting in sustainable competitive advantage. Multiple business strategies are essential to reply successfully to any environment condition (Parnell, 2006): In the mid to late 1980´s, when the environments were rather stable, flexibility wasn´t so crucial in business strategies. Although to survival in the rapidly changing, extremely volatile current market contexts, requires flexibility to face any eventuality. If a firm´s business strategy could not cope with the environmental and market contingencies, long term survival becomes improbable. Diverging the strategy into different roads, making the most of opportunities and avoid threats created by market conditions, is a pragmatic approach for a firm nowadays. Porter revised his preliminary view and accepted that hybrid business strategy could subsist (Porter, 1991, p.101).

Critical analysis done in parallel for the different strategies identifies basic value in all strategies for creating and sustaining a competitive advantage. Reliable and superior performance, than competition, could be attained when "hybrid strategy" is adopted, depending on the market and competitive conditions. Hybrid strategy should be adjusted regarding the degree which each generic strategy (cost leadership or differentiation) should be given priority in practise.

In short Porter describes three generic strategies for gaining strategic advantage.

  1. Cost Leadership - should we lower our costs?
  2. Product/Service Differentiation - should we differentiate our products and services?
  3. Focus - should we target a broad market or a narrow one?

1 Porter 1980