Porter’s notion on “stuck in the middle” or “hole in the wall” is debatable, it being mutually exclusive. It might be true in some cases but not all the time. Even beyond Porter’s generic strategies, Toyota has been operating and already proven that it’s possible to be a low cost producer of a differentiated product. It was able to achieve leadership in North America, surpassing General Motors. They continuously find ways to reduce production costs and at the same optimize its process so that it could introduce new models faster than its competitors.
They’re known for their Toyota Production System (TPS) which other vehicular companies were trying to mimic. This TPS is the main reason why there’s Just-In-Time (JIT) and Lean Manufacturing system in the manufacturing industry today. Toyota used these two manufacturing methods to gain competitive advantage over competitors. In JIT, Toyota build vehicles based on immediate market demands rather than anticipation on future market demands. There’s no overstocking. This strategy results in efficiency and quality.
It is mentioned above that cost leadership gains competitive advantage through efficiency while differentiation gains its competitive advantage through quality. This is a proof that cost leadership and differentiation are not mutually exclusive. And so is true with Lean Manufacturing. Its concept is eliminating those processes that will not add value (differentiation) to the product that a customer is willing to pay (cost leadership) for. But it is important to note that though Porter’s Generic Strategies may not entirely true anymore, it is still not obsolete.
It is still should be used by companies who are using the traditional management technique. It can also be used by companies who use new management because it offers the broadest picture. Also, it is Porter, through his generic strategies, started that every strategy should be carefully analyze internally and externally and their potential future development. We must remember that Porter’s Generic Strategies is only one of the many strategic tools that we can use.
One of the most famous analysis tool used is the SWOT Analysis. Also, there are PEST Analysis, Core Competencies Analysis, Value Chain Analysis, Product Life Cycle and so many others. Each like Porter’s Generic Strategies has limitations that an analyst must understand. And as what experts say, a good strategy should not be based on just few strategic tool models. And like what was discussed earlier, we are in the age of information technology. Technological progress modifies the market into dynamic and complex market.
