Demonstrate coherent and detailed knowledge and understanding of strategic management within a global and sustainable context.

Assignment Brief

• Critically evaluate and compare the Porter’s Generic Business Strategies model with the Strategy Clock for business strategies. (700 words – 60 marks)
• Using the Strategy Clock, explain the existing business strategy of either NIKE or IKEA and recommend with justification, key strategic actions needed to improve the UK market share of either NIKE or IKEA. (500 words – 40 marks)

Strategic Management

1. Demonstrate coherent and detailed knowledge and understanding of strategic management within a global and sustainable context.
2. Explain, critically analyse and evaluate conceptual frameworks, models and theories to aid strategic analysis and decision making
3. Identify strategic problems and issues facing a range of organizational types and situations
4. Generate and evaluate strategic actions and solutions to problems within complex and unpredictable environments.

Sample Answer

Comparison of Porter’s Generic Strategies and the Strategy Clock

In the field of strategic management, models such as Porter’s Generic Strategies and the Strategy Clock are commonly employed to analyse competitive positioning and to guide firms in gaining a sustainable advantage. Both models offer distinct yet complementary perspectives on how organisations can compete within markets.

Porter’s Generic Strategies, introduced by Michael Porter in 1980, presents three core strategic options: cost leadership, differentiation, and focus (which can be cost focus or differentiation focus). Porter argues that firms must adopt one of these strategies to achieve competitive advantage and warns against being "stuck in the middle," which could result in below-average performance (Porter, 1980). Cost leadership aims to achieve the lowest operational costs industry-wide, allowing the firm to offer lower prices than competitors. Differentiation focuses on creating a unique product or service valued by customers, allowing for premium pricing. The focus strategy targets a narrow market segment, tailoring either cost or differentiation advantages to a specific group.

In contrast, Bowman’s Strategy Clock, developed by Cliff Bowman and David Faulkner (1996), expands Porter’s framework by offering eight strategic positions based on varying degrees of perceived value and price. The model provides more granularity, allowing firms to consider a broader spectrum of strategic choices. The eight positions are:

1. low price/low value
2. low price
3. hybrid
4. differentiation
5. focused differentiation
6. risky high margins
7. monopoly pricing
8. loss of market share

A key difference between the two models lies in their emphasis on customer perception. While Porter focuses on the source of competitive advantage (cost or differentiation), Bowman’s Clock incorporates perceived value by the customer, thus allowing for more nuanced pricing strategies. For example, the hybrid strategy on the Strategy Clock combines relatively low cost with differentiation, a position Porter discourages due to the risk of being ‘stuck in the middle’. However, empirical evidence suggests that hybrid strategies can succeed, particularly in dynamic markets (Johnson et al., 2017).

Moreover, the Strategy Clock considers less sustainable strategies, such as monopoly pricing or low value/low price, which are absent from Porter’s model. This inclusion is particularly relevant in unregulated markets or monopolistic environments, offering a broader application across industries and market conditions.

In summary, while Porter’s model provides a clear, structured approach to achieving competitive advantage, its rigidity limits applicability in complex or dynamic environments. In contrast, the Strategy Clock offers a more flexible, customer-centric framework, enabling firms to explore multiple strategic routes. Nonetheless, both models are valuable, and in practice, they can be used complementarily: Porter’s model to define the core strategic thrust, and the Strategy Clock to fine-tune pricing and value propositions.

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