Porter´s (1980) Generic Strategies, Performance and Risk

Inhaltsangabe:Introduction: In the summer of 2006 the board of Volkswagen announced the withdrawal from the luxury class market in North America, due to unsatisfactory results with the Phaeton. The Phaeton is Volkswagen’s most prestigious project that should attack luxury carmakers as Mercedes or BMW. More importantly the Phaeton should upgrade Volkswagen as a brand, moving away from the image as a ‘people’s carmaker’ to a high-end carmaker for business people as well. Unfortunately the customers did not perceive Volkswagen as a producer of luxury class cars, even though tests have shown that the Phaeton could actually compete against Mercedes or BMW on a technical level. After drawing a balance the board decided to withdraw the Phaeton from the North American market. On the other hand there are also success stories within the car manufacturing industry. Porsche for example, is able to outperform its competitors by bringing products to the market that set high value on quality and status. Thereby Porsche became the most profitable carmaker in the world. The other extreme is Toyota. They outperform its competitors by bringing products to the market that are priced well below market average. This case from the car manufacturing industry illustrates a good example, in order to introduce the reader to the complex topic of corporate strategy and strategic choice. Firms such as Porsche and Toyota lie at the edges of the strategic spectrum, whereas Volkswagen underperforms since several years, because their products neither appeal to quality-conscious nor price-sensitive customers. However Volkswagen is able to generate profits that defend its position as the biggest car manufacturer in Europe, although the firm cannot be assigned to one of the extreme points in the strategic spectrum, as for example Porsche or Toyota. Apparently these three firms can be separated on behalf of their strategic choice. The question then ultimately arises, why firms choose a certain strategy? Why is Volkswagen not trying to compete on price with Toyota or trying to compete on outstanding products with Porsche? Certainly that is easier said than done, since definitions of successful strategies have not led to consensus yet in the academic world. Several researchers formed the foundation for successful corporate strategies. Among others Miles and Snow proposed defender, prospector, analyzer and reactor strategies that determine the success of a firm. Their typology has been [...]