Competitive Strategies and Firm Performance

This assignment delves into the crucial relationship between competitive strategies and a firm's overall performance. Students are tasked with analyzing different competitive strategies and their effects on business success. The analysis should incorporate Porter's Five Forces model to understand the competitive landscape and explore concepts like competitive advantage and strategic fit. The assignment emphasizes applying theoretical frameworks to real-world examples provided in the text.

Running head: COMPETITIVE STRATEGIES
COMPETITIVE STRATEGIES
A case study of Virgin Galactic
Name of the Student:
Name of the University:
Author Note:

COMPETITIVE STRATEGIES 1
Q. Discuss which one of the FIVE GENERIC COMPETITIVE STRATEGIES is Virgin
Galactic employing? Justify your answer
Answer:
Porter’s Generic competitive Strategies are ways of competing with other
organisations in the market. According to Ibrahim (2015), this competitive strategy actually
determines whether the profitability of a firm is above or below the industry average. It is
when the average profitability is above the industry, the organisation can be said to have
competitive advantage in the long run. Porter’s showed two basic types of competitive
advantages as enjoyed by the organisations. These are low cost and differentiation strategies.
These are the basic means that the organisations undertake at times in a combined way to
achieve competitiveness in the market where it operates (Becerra, Santaló & Silva, 2013).
These two competitive strategies have leaded to three generic strategies that would help an
organisation to achieve above average strategies and better performance in the industry.
These three generic strategies are cost leadership, differentiation and focus. Again, the focus
strategy has two other variants; these are, cost focus and the differentiation focus.
Fig: Porter’s Competitive Generic Model
(Source: Becerra, Santaló & Silva, 2013)

COMPETITIVE STRATEGIES 2
In the case study, it has been found that the Virgin Galactic group has come up with a
completely new and innovative approach where the group will start offering spaceflights to
the customers. The company wants to design a robust spaceship called Virgin Galactic that
would offer customers to travel to space and have an orbital journey and then come back to
the only habitable planet. Richard’s Branson vision is to introduce space tourism to the
consumers. The idea is to make opportunities for people to become astronauts and visit space
in lieu of a huge amount of money. For the same purpose, it has been found that the Virgin
Galactic had also taken $25, 000 deposits from people who want to ensure their flight to be
booked in advanced, while the actual price of the ticket has been kept as high as $200, 000.
The confidence that the Virgin group showed towards their venture showed that the dream
can be easily turned into reality. Among the keenly interested passengers, Stephen Hawking,
Katy Perry, Brad Pitt and Angelina Jolie are few names worthy to be mentioned. The
company has already come up with the physics and chemistry behind the launch of this
vehicle that would take people far away from the earth. All it requires is now the
accomplishment of the plan to see the reality that has always been a dream for people.
Keeping this particular case study and the business venture into consideration, it can
be said that the Virgin group is definitely undertaking the approach of product differentiation
strategy as part of the business strategy. The three generic strategies can be explained here:
1. Cost Leadership: The idea of the cost leadership strategy is to offer the particular
product or service in the lowest possible price to the consumers in the market. As
commented by Lechner and Gudmundsson, (2014), cost of products is definitely a
vital factor when it comes to consumer decision making. Therefore, considering the
price or rate of the product is important and in fact a lower priced product has the
chances of higher selling in the market. In order to offer the product at a lower rate,
the organisation needs to manage the cost required for the manufacturing of the

COMPETITIVE STRATEGIES 3
product. This is when the concept of cost leadership comes to play. The idea of cost
leadership is when s firm sets out to become the low cost producer in the industry
where it operates. The cost leadership strategy include the pursuit of the economies of
scale, the proprietary technology and the preferential access to the required raw
materials and other things for the manufacturing of the particular goods (Brenes,
Montoya & Ciravegna, 2014). It is when the organisation will be able to gain the cost
advantage, it would become a low cost producer in the industry and will be an above
the average performer.
Aligning this factor with the idea of Virgin group, it is clearly evident that the
company is not at all looking for cost leadership strategy because the business idea
that has been proposed requires huge investment and there is no scope for reducing
the price in terms of its raw materials or products. Therefore, this particular factor can
be easily rejected from the given factors of Porter’s Generic Forces.
2. Differentiation: The second generic factor is the differentiation. The idea is to serve a
unique product or service that will be equally acceptable by the consumers because
the product will be best from all the dimensions. The differentiation strategy is based
on the concept buyers would perceive the product to be important as it will uniquely
serve the needs of the people (Herzallah, Gutiérrez-Gutiérrez and Munoz Rosas,
2014). In fact, this product can also be rewarded with a premium price for the
uniqueness that it will serve.
The differentiation strategy can be rightly aligned with the case study as the
idea is to introduce a completely new venture of taking people from the earth to the
outer space. The cost and expenditure on these ventures are not low but it requires lot
of money that is easily been appreciated by the interested people because they have
been found to make advance payment for the future venture.

COMPETITIVE STRATEGIES 4
3. Focus: The third strategy is focus when there is a narrow scope of competition within
the industry. The particular business head selects a particular area of business and
they expand in that direction. Moreover, in this particular strategy, the organisation
also selects a particular target group of people for whom the business will be proposed
(Riasi, 2015). This is the method of serving exclusive service or product to the
particular target group. From the case study, it can be clearly stated that the Virgin
group has focused on creating a completely new business venture that would create
hype among the target group of people. In this case, the Virgin Group has also
selected a particular target group of people as well. The target group is the rich and
wealthy people which can easily afford the high price that this venture demands
(Cusumano, Kahl & Suarez, 2015). At the same time, the science enthusiasts as well
who want to know about the uniqueness of this universe. The Focus generic strategy
has also been broadly divided into two segments, these are:
a. Cost focus: In the cost focus strategy, the particular firm looks into the cost
advantage among the target segment in order to achieve more profitability in
the business.
b. Differentiation focus strategy: This is another narrowed down feature of the
business strategy where the organisation makes focus on the difference in the
product or the service offered by the organisation considering the target group
of consumers. It is important to consider the particular target group segment to
which the product can be sold (Prajogo, 2016). Therefore, it can be easily said
that the business strategy as undertaken by the Virgin group is definitely the
differentiation focus strategy.
As commented by Porter and Heppelmann, (2015), the focus strategy delivers certain
competitive advantages to a particular organisation in terms of serving the rivals and offering

COMPETITIVE STRATEGIES 5
a better product or service to the consumers. In this respect, it can be easily said that the
target group of people were selected prior to thinking about the business. The idea of sending
people to the space and to create thousands of astronauts cannot be considered as a product
idea for the common people but this has been definitely done for the sake of the rich people
who can easily afford the price of the ticket required for flying high (Grant, 2016). In fact,
from the case study it has also been evident that the organisation has also taken money from
the interested candidates who want to visit the outside world. Therefore, there is no doubt that
the competitive strategy as undertaken by the organisation is nothing but the focus
differentiation strategy.
There are certain points that need to be considered when an organisation undertakes
the differentiation strategy. Primarily, the organisation needs to carry out detailed research
and analysis of the market where it wants to operate (Teeratansirikool et al., 2013). As
mentioned that the focused differentiation strategy aims towards a particular target group,
delivering the best suitable product is the most important criteria. The ability of delivering the
high quality service to the target group is the only major concern for the business. If these
factors are not fulfilled then there remains the chance that the business venture will not be
accepted by the target group and the business venture will not be a successful one. In such
cases, risks will be inevitable and the organisation might have to suffer a lot (Porter &
Heppelmann, 2014). The differentiation strategy is not undertaken by large organisations
because there remains the chance of risk. On the other hand, these organisations always
prefer to undertake the cost differentiation strategy and look into the expenses behind the cost
of manufacturing the product and offer the same to the consumers (Panwar et al., 2016). It
cannot be denied that these are on-going strategies that are undertaken by the organisation in
order to create a difference in the market and create a better market for itself that would
increase the profitability of the organisation.

COMPETITIVE STRATEGIES 6
With the detailed analysis on the Porter’s Generic Strategies, it can be said that the
business strategy undertaken by the organisation is Focus Differentiation strategy where the
company wanted to offer something new and unique to the people. The target group of people
was fixed before proposing the idea and that they were the rich and wealthy people having
crave for something unique to experience. The proposed business idea has not turned into
reality till now but it has definitely created a stir among the particular group of people who
want to gain the experience. The proposed strategy could be successful if the proposed plan is
successfully carried on. There was no scope for undertaking other generic strategies as per
the recommended business and this was the only suitable strategy for the business. It can be
said that the business strategy should always be considered on the basis on the market
condition and the target group of people as well and with it the other competitors present in
the market.

COMPETITIVE STRATEGIES 7
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COMPETITIVE STRATEGIES 8
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COMPETITIVE STRATEGIES 9
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