Strategic Management Assessment: Porter's Generic Strategies and Clock

This report provides a comprehensive analysis of strategic management, focusing on Porter's Generic Strategies and the Strategy Clock model. It begins by explaining Porter's three generic strategies: cost leadership, differentiation, and focus, along with the Strategy Clock model and its eight strategic positions. The report then critically evaluates and compares these two models, highlighting their similarities and differences in application and scope. Part B of the report applies the Strategy Clock model to Nike, examining its differentiation strategy, competitive advantage, and recommendations for future market success, particularly in the UK market. References from academic journals and business publications are used to support the analysis.

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Part A
Porter’s Generic Strategies
Porter's generic strategies help a business to develop a competitive advantage within the target
market. The strategies that are given in this model include differentiation strategy, cost strategy
and focus strategy (Johnson,2016). A business chooses one of the strategies from these three in
order to be successful and to get a competitive advantage. Porter generic strategies are useful
for businesses as any business competes in the market by lowering the costs, by differentiating
products from other competitors and by using focus strategy. These three strategies are
described below in detail:
Source: (Johnson, 2016)
Cost Leadership Strategy: The cost leadership strategy focus on offering products and services
to the target market at a lower cost than competitors. Through offering low cost the company

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can gain a competitive advantage. The cost leadership strategy is suitable for businesses that
have direct control over the operating costs and have a good relationship with its suppliers that
strengthen the supply chain. With the help of a cost leadership strategy, the company can operate
in the market in the long run as this strategy is difficult to imitate by other competitors
(Echchakoui, 2018). The most suitable example is Wal-Mart.
Differentiation Strategy: This strategy focuses on product differentiation that means offering
unique and innovative products to the broader target market at the premium price. Businesses
with this strategy increase their profit margin and sustain in the market until the product becomes
obsolete (Viltard, 2017). Furthermore, this strategy is useful for businesses whose target
customers pay higher prices and not price sensitive and ready to pay an extra amount for value
and services such as Apple Inc. and Google.
Focus Strategy: The focus strategy includes targeting a niche market with one of the two
strategies stated above. The cost focus strategy includes offering products and services at low
cost to the niche segment or the narrow target market. The differentiation focus strategy includes
targeting a small group or niche market with innovative products and a unique proposition.
Strategy Clock
The strategy clock concept was founded by Bowman and David, hence named as Bowman’s
strategy clock. According to Bowman, “the factor of competitive advantage is then the factor of
cost advantage and influences the strategic positioning of the company and product position in
the market”. The purpose of this concept is to make businesses aware of the competition level in
the market so that accordingly they can select a strategy (Desai, 2019). This model evolved from
porter generic strategies and based on two aspects that are value perceived by customers from

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products and price of services and products offered. Further, these two aspects are represented
and marked on a high and low scale and on that basis eight strategies are highlighted that can be
used by businesses.
Source: (Desai, 2019)
The strategy clock model describes strategies on the basis of four quadrants, as firstly the
business needs to identify its current position in the market as per the strategy model and after
that can develop future strategies to compete with the competitors. For instance; hybrid strategy
is in the third quadrant that states higher perceived value at a low cost.
Evaluation and Differences
By understanding both the models it can be said that the porter generic strategies model covers
narrow aspects and useful for businesses that operate at a small level. The strategy clock model

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evolved from generic strategies and includes eight strategies that are useful for large scale
businesses that cover a broader target market. Furthermore, Bowman's strategy model based on
the perceived value from products and the price of the product but generic strategies based on
cost and differentiation of products. Due to that strategy model is taken as a more reliable model
to develop strategies.
However, both these models have some similarities that are; the purpose of both models is to
gain a competitive advantage for businesses. As porter generic strategies included three
strategies that help to gain a competitive advantage in the target market and on the other side the
purpose of strategy model is also to develop a competitive advantage for businesses. Hence, both
the models are based on the same concept but the differences are in the scope of models because
strategy model is best suitable for a large organization and cover broader aspect whereas generic
strategies cover narrow aspects.

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Part B
Strategy Clock Model for NIKE
Bowman's strategy clock model includes eight strategies and considering this for Nike it is
analyzed that the company uses differentiation strategy. In this strategy, the company offers
services and products that offer a unique value proposition for customers and with that charge
premium prices (Mahdi et.al,2015). This strategy is used by companies when they design and
develop products that are unique and differentiated from their competitors as this leads to a
competitive edge in the market. When companies implement this strategy they mainly focus on
branding of products in order to make the target market aware of the quality or value perceived
as well as price (Cavaleri, and Shabana, 2018). Nike is a well known brand because of the high-
quality products offered by the company to its target market at premium prices. Nike positioned
itself as the company that offers high-quality products or customer perceived value from
products. This strategy is helpful for the company because competitors are not able to offer
quality products like Nike and due to that the company is enjoying high-profit margins in the
market against its competitors (Rexhepi, and Srhoj, 2018).
Nike expanded globally by using a differentiation strategy and covered a 10.2 percent market
share in the UK (Brandenburger,2019). At present, Adidas is the biggest competitor of Nike in
the sports shoe and apparel industry. However, Nike is able to compete in the UK market
because of high-quality products and high perceived value (Brandenburger,2019). The product
differentiation strategy of Nike is the tool that helping the company to get a competitive
advantage against Adidas. With that Nike is able to compete in the market but it is difficult for
the company to sustain itself in the market on the basis of this value as the company needs to

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find the next better competitive advantage in order to sustain itself in the market. The
significance of using differentiation strategy is the loyal customer base of Nike in the UK, brand
image, higher target market segment and high-profit margins that proportionally impact on the
profitability of Nike and overall financial performance of the company. Hence, with a
differentiation strategy, Nike is gaining a competitive advantage at the global level and in the UK
as well.
Recommendations
From the analysis of Nike's business strategy, it is identified that the company is using a
differentiation strategy to compete in the market and to gain a competitive advantage. However,
in the UK the company is getting tough competition from Adidas and looking into this it can be
said that the current strategy of Nike can be imitated by its competitors. It is recommended to
Nike that in order to expand in the UK market and to capture larger market share the company
should focus on innovation as well as lowering the price of products that means offering high
perceived value products to its customers at the price lower than competitors. Through that, the
company can sustain its differentiation strategy and at the same time use a pricing strategy to
compete with competitors in the market that help Nike to gain competitive advantage and
increase its market share or customer base in the UK.

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References
Brandenburger, A., 2019. Strategy Needs Creativity. Harvard Business Review, 97(2).
Cavaleri, S. and Shabana, K., 2018. Rethinking sustainability strategies. Journal of Strategy and
Management.
Desai, C. (2019). Strategy and Strategic Management'. Management for Scientists. Emerald
Publishing Limited, 65-84.
Echchakoui, S., 2018. An analytical model that links customer-perceived value and competitive
strategies. Journal of Marketing Analytics, 6(4), pp.138-149.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Mahdi, H.A.A., Abbas, M., Mazar, T.I. and George, S., 2015. A Comparative Analysis of
Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to
Competitive Advantage in the context of a Dynamic and Competitive
Environment. International Journal of Business Management and Economic Research, 6(3),
pp.167-177.
Rexhepi, G. and Srhoj, S., 2018. Strategy as an ever evolving road to success of growing
enterprises. World Review of Entrepreneurship, Management and Sustainable
Development, 14(3), pp.333-347.
Viltard, L.A., 2017. Strategic mistakes (AVOIDABLE): the topicality of Michel Porter’s generic
strategies. Independent Journal of Management & Production, 8(2), pp.474-497.