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Porters Generic Strategies

Michael Porter believed that a firm can choose between two options. These are cost advantage and differentiation. There are according to Porter three generic strategies that a company can employ. These are cost leadership, differentiation and focus. Cost Leadership Overall, cost leadership requires a firm to develop vigorously an optimally efficient scale of operation and to control tightly the firms cost in all activities (Reid et al 1993). Focus Strategy A focus strategy requires a firm to concentrate on a particular market segment which may be dictated by factors such as the buyer, the product, or the location rather than the overall market. The strategy is predicted on the notion that a firm that devotes its entire energies to a niche or target can better achieve competitive advantage than those rivals which broadly compete across the market (Reid et al 1993). Differentiation Firms that follow the generic differentiation strategy seek to exploit firm-specific assets by producing goods or services, which are almost unique compared to those offered by rivals. Differentiation is not limited to the physical nature of the product. Other significant dimensions of differentiation include distribution channels, marketing efforts, after sales service and so on. Essentially a firm seeks to establish itself as unique within its industry. Effective differentiation is generally resistant to the forces of competition. Potential and existing rivals must overcome the uniqueness of the product and try to erode customer loyalty. Customers are less likely to switch because of a perceived lack of similar alternatives (Reid et al 1993). The recommended strategy for Burger King is Differentiation. Recommended Strategy Differentiation Burger King can use differentiation strategy as its main strategy in competing with its rivals. The Have It Your Way brand promise pervades everything that Burger King does especially in the area of product and service. Burger King also achieves differentiation through its new

innovative products. Some of these innovative products are Burger King Chicken Fries, Burger King Stacker and Burger Kings Value Menu with 10 items. Burger King continues to introduce innovative products in the breakfast segment. One prime example is Burger King Joe. Burger Kings Have It Your Way strategy is among the top things that differentiates it from its competitors. At Burger King, consumers are given more food and serving choices. Personalization coupled with fast and efficient service makes dining experience at Burger King unique. Burger King boasts its veggie burger, said to be one of its kind in the fast food industry. Parents are also given more control when it comes to their childrens foods. For example Burger Kings kids menu lets parents choose applesauce and juice instead of fries and a soft drink. Burger King takes pride in its ability to provide personalized products. Guests can gave the sandwiches at Burger King the way they want them. With the Fast Food Restaurant business so closely related, separating your business from the rest is vital for survival. Most of these companies offer low priced, quick food service with fairly similar menus. Due to these similarities, competitive advantages must be displayed to the public in order to distinguish their business. It can be found that competitive advantages are gained by offering some value to customers that distinguish it from their competitors. By differentiating their products based on different features like, services, channel, people, imagethey can gain customer support over closely related markets. Unfortunately it isnt as easy a just having these advantages, it is also important to choose which differences, and how many to promote.

In the Burger Kings new commercial with a baby born yesterday, the company attempts to make their differences extremely evident. Realizing the needs of their customers, and the drive for affordable burgers with a large amount of meet, Burger King makes the fact blatant that they offer a superior burger with more meat. With the intention of grasping McDonalds customers they display their burger next to their new bigger one. This shows that Burger King is living up to its expectations, and is an obvious deal, even if you were born yesterday.

Ansoff Matrix
Ansoff (1965) strategy is composed of four components. These are product/market scope, growth vector, competitive advantage, and synergy. Ansoff identified four generic growth strategies:

Market Penetration Market Development Product Development Diversification

Market Penetration The market penetration strategy amounts to increasing sales of existing products while at the same time trying to maintain current margins of profitability on sales. When the market is expanding this may be accomplished through active marketing in order to get more first-time users to buy the product or to increase product usage of existing buyers or to increase product usage of existing buyers or to increase the frequency of use (Proctor, 2000). Product Development A new product can be defined in several different ways. A product can refer to a physical entity or a cluster of expected customer benefits. From the point of view of a business, a product innovation may represent a change in, or addition to, the physical entities that make up its product line. From a market perspective, the term refers to a new or revised set of customer perceptions about a particular cluster of benefits (Proctor,2000). Market Development Finding new markets may not guarantee success for the firm. A firm can also achieve growth in developing market. Market development strategy involves developing new markets by duplicating the business operation, with minor adaptive changes. The firm can undertake a market expansion strategy. In market expansion, the same expertise and technology and sometimes even the same plant and operations facility can be used. There is therefore potential synergy and resulting reductions in investments and operating costs. Geographic

expansion may involve changing from regional operation to a national operation, moving into another region, or expanding to another country (Proctor, 2000). Diversification Diversification involves moving simultaneously into new products and new markets. It is a risky strategy but with careful selection of the right kind of businesses, considerable improvements in profitability can be experienced. Diversification can take place into related or unrelated products. A related diversification is one in which the new business has meaningful commonalities with the core business. These provide potential to generate economies of scale or synergies based on exchange of skills and resources. A diversification strategy can be implemented by an acquisition (or merger), new business venture or strategic alliance (Proctor, 2000). Two of the recommended strategies for Burger King is market development and diversification of products. Recommended Strategy Market Development Burger King can employ a market expansion strategy that utilizes its franchise system. Burger King is second to McDonalds when it comes to market expansion with operations extending up to 69 countries and US territories. In order to gain competitive advantage and to maintain its top position, Burger King must continue its expansion in foreign economies. In order to attract new customers and to remain competitive, Burger King must continue its market expansion strategy. Burger King must also focus on emerging economies such as China, where greater opportunity for growth and success is available. Recommended Strategy - Diversification of Products There is no doubt that among its competitors, Burger King offers the most diverse and perhaps the most innovative products. Burger King must continue to invest and remain committed to research and development in order to come up with more diverse and innovative products. One specific consumer product demand that Burger King must focus on is the demand for healthier, higher quality food items. The consumers are starting to get more health conscious and Burger King must be among the first companies to satisfy this demand. Burger King must incorporate healthy foods in its menu.

Evaluation of Strategies
I. Differentiation Suitability The competitive environment in which Burger King operates is highly intense. Product and service differentiation is a suitable strategy for Burger King as it will be a source of sustainable competitive advantage. Feasibility Burger King possesses the necessary resources and facilities to be able to introduce products that will differentiate it from its competitors. Burger King's expertise in service and its commitment to Have it Your Way brand promise is also a source of differentiation that will be a competitive advantage in the future. Acceptability There is a growing demand among the consumers for healthier foods. Being able to satisfy the changing demands of the consumers will be a source of competitive advantage. II. Market Development Suitability The competition among restaurants are becoming more intense. Burger King's major competitors are expanding their operations. They are constantly searching for new markets to explore. In order for a multinational business to succeed, it must take advantage of globalization. Market expansion is a suitable strategy for Burger King as it will harness growth and success in competition. Feasibility

Market expansion is a feasible strategy for Burger King. Burger King possess the necessary resources and expertise to expand its operation. Burger King, with its more than 50 years of experience will be able to successfully expand its business in different locations around the world. Acceptability The success of a multinational company lies in its ability to explore and take advantage of foreign markets. Burger King must be able to expand its operation in new countries. Market expansion is an acceptable strategy for a company such as Burger King that seeks global success. III. Diversification of Products Suitability In a competitive industry, such as restaurant industry, differentiation in products and services is the key. Diversification of products is one of the suitable strategies for Burger King. Burger King is considered as a quick service restaurant that is able to offer a diverse menu. In order to remain competitive, Burger King must be able to offer more innovative products that will cater to different market segments. Feasibility Diversification of products is a feasible strategy, since Burger King has the resources and capability to employ such strategy. Burger King's research and development facilities are among the best in the industry. Burger King's tradition of offering quality products that are hard to copy must be maintained. Acceptability The preferences and attitudes of the customers have changed. Customers are becoming more varied and their needs and requirements are changing. In order to attract more customers with different tastes and preferences, Burger King must offer a diverse menu that will attract a wider population.

Reference All Hail the King, Burger King Annual Report 2006, Burger King, viewed 05 May, 2008,

< http://media.corporate-ir.net/media_files/irol/87/87140/BKCAR2006.pdf>.

Ansoff, I (1965). Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion, McGraw-Hill, New York.

Proctor, T. (2000). Strategic Marketing: An Introduction, Routledge, London.

Reid, G., C., Jacobsen, L., R., and Anderson, M., E. (1993). Profiles in Small Business: A Competitive Strategy Approach, Routledge, New York.

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