Porter Argues That If a Firm Is to Attain Competitive Advantage; It Must Choose Between the Types of Competitive Advantage It Seeks, Discuss Using an Industrial Example?

1478 words 6 pages
Porter argues that if a firm is to attain competitive advantage; it must choose between the types of competitive advantage it seeks, discuss using an industrial example?

An industry can be defined as a group of companies offering products that are closely substituting for each other in order to satisfy customers. Competitive advantage can be defined as when a firm sustains profit which exceeds the company’s average; it automatically possesses competitive advantage over rivals. The business strategy for most companies is to achieve a sustainable competitive advantage. This essay aims to discuss why firms must choose between types of competitive advantages using an industrial example.

Michael Porter indentified that there are 2
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Also, it has the ability to reduce price to compete with substitute products, less affected by a fall in the price of inputs as it has powerful buyers. Some of the disadvantages are competitors may lower their cost structure, they may imitate the cost leaders method and cost reductions may affect demand.
Furthermore, Porter argues that a low cost position acts to a firm’s benefit against rivalry, and it can act as a defense against powerful suppliers by providing more flexibility to cope with input increases. The car industry has always been one of the most competitive industries because of the huge revenues and profits available at stake. The competition has increased drastically in this industry as there has been a constant need to continuously develop new kinds of car models to satisfy the needs of particular groups of buyers. For example, Toyota has used its low cost structure to produce efficient and increasing ranges of vehicles tailored to different segments of the car industry. Its ability to move from the design to production stage in two to three years gives it the benefit of bringing out new models faster than its competitors and capitalize on the development of new market segments or niches. Also, Toyota has been a leader in positioning its range of vehicles to take advantage of emerging market segments. For example , in the sports utility segment, it offers six models of sports


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