Philosophical Foundation of Administration

1. What is Comparative Management? Discuss the importance of

understanding it in the performance of various administrative functions?
Elucidate.
ANSWER:
 Comparative Management identifies, measures, and interprets
similarities and differences among managers' behaviors, techniques,
and practices as they exist in different countries. It focuses on the
similarities and differences between various business and
management systems. The overall environment has a significant
impact on management behavior. What a manager does in the US, UK,
or Nigeria is defined by the fundamental functions of management.
However, what is being attempted and the methods used to do it can
and do differ amongst countries. This is largely due to managers’
values, beliefs, attitudes, experiences, and customs.
IMPORTANCE OF COMPARATIVE MANAGEMENT
 It helps in explaining, analyzing, and understanding of various social
and economic phenomena. It helps in dealing with the differences of
management and other differences of various countries and their
effect on International Business.
 Study of comparative management becomes necessary so that
managers can easily achieve their individual and organizational goals.
 The study of comparative management helps in identifying, describing,
and predicting the impact of environmental factors on the
international business. Comparative management is very useful for
trading globally as it allows us to know about various differences and
how to remove them from a company's products and services.

2. The Utilitarian Philosophers argue that the government is necessary and it is

a source of good and happiness. Agree or Disagree? Defend your answer to
be the best of your knowledge.
ANSWER:
AGREE. Because of the fact that Utilitarian’s believe that the goal of morality
is to improve people’s lives by increasing the amount of good things (like
 pleasure and happiness) and reducing the amount of bad things in the world
(such as pain and unhappiness). They reject moral codes and systems that
are based of customs, traditions, or orders given by leaders or supernatural
beings and consist of commands and taboos. Instead, Utilitarian’s believe
that the positive contribution a morality makes to human (and possibly non-
human) is what makes it true or justifiable.

3. The Philippine Constitution which is the fundamental law of the land is

mandated for the adoption and practice of the democratic ethos. Cite
instances to prove that the Philippines is indeed democratic in the right
sense of the word.
ANSWER:
According to The 1987 Constitution of the Republic of the Philippines –
Article II

Section 1. The Philippines is a democratic and republican State. Sovereignty

resides in the people and all government authority emanates from them.

Section 2. The Philippines renounces war as an instrument of national policy,

adopts the generally accepted principles of international law as part of the
law of the land and adheres to the policy of peace, equality, justice, freedom,
cooperation, and amity with all nations.

Section 3. Civilian authority is, at all times, supreme over the military. The
Armed Forces of the Philippines is the protector of the people and the State.
Its goal is to secure the sovereignty of the State and the integrity of the
national territory.

Section 4. The prime duty of the Government is to serve and protect the
people. The Government may call upon the people to defend the State and,
in the fulfillment thereof, all citizens may be required, under conditions
provided by law, to render personal, military or civil service.

Section 5. The maintenance of peace and order, the protection of life,

liberty, and property, and promotion of the general welfare are essential for
the enjoyment by all the people of the blessings of democracy.

Section 6. The separation of Church and State shall be inviolable.

4. Do you agree that the democratic governance is indeed for the purpose of
advance development? Support your answer.
ANSWER:
YES. In view of the fact that, in a study of 180 countries over 50 years,
Gerring et al. (2005) found that number of years of democratic
experience has a positive effect on a nation’s economic growth. These
findings shows that a country’s democratic experience has a cumulative
effect on economic progress, resulting in a virtuous cycle. When a
country stays on a democratic road for a long time, it develops
economically, which aids in the consolidation of democracy and, in turn,
leads to more economic progress.

5. Maximilian Karl Emil Weber, a German sociologist who is the Father of

Bureaucracy, has been the starting point and the main source of inspiration
of many students of administration. The characteristics contained in the ideal
type correspond more or less, to concrete feature of our existing
organization. Identify and explain the main characteristics of bureaucratic
type of organization. Can you consider your own organization of this kind?
Justify your answer.
ANSWER:
BUREAUCRACIES HAVE FOUR (4) KEY CHARACTERISTICS

 Specialization - Everyone in a bureaucracy has a specific job to do and

often becomes an expert at it. Bees have specific jobs, too, collecting
pollen, making honey, or populating the hive.

 A division of labor - In a bureaucracy, nearly every task is broken down into

its component parts, and different people work on different parts of the
task. Together they get the job done, just like bees in a hive who divide
their labor for maximum efficiency.

 A set of formal rules - These so-called standard operating procedures are

the clear, written instructions for each specialized job at every level of the
hierarchy. Workers who follow them can be sure that they are on the same
page as their colleagues and are doing their jobs properly. According to
 beekeepers, bees, too, have a sophisticated system of communication that
keeps their hives running smoothly.

 A clear hierarchy - Bureaucracies have a firm chain of command. Every

worker has his or her own place in the chain, and everyone's work is
overseen by someone on the next level up. Power flows down from the top
of the hierarchy and diminishes as it approaches the bottom. Just think of
the beehive. The queen bee stands at the top, and each worker bee or
drone has its own place in the hive's chain of command.

Human Resource Management

1. The merit system as an embodiment of the “culture of competence
and commitment to the public service” is highly desired and
esteemed by the civil service personnel. Unfortunately, the political
patronage system serves as a “counter culture” which impedes the
positive development and institutionalization of the culture of merit
in the bureaucracy. What action measures can you recommend in
order to improve the administrative capability of the bureaucracy?
ANSWER:
Certain actions could be taken to significantly improve bureaucratic
capability. The following are just some strategies might consider:
 Changing the values and attitudes - This first idea is that
bureaucratic personnel's attitudes and values are so deeply
ingrained that they work either through hierarchical authority
or external pressure. This is satisfactory up to a point.
Authority exceeding the limits is counter-productive. Rather
than the matter of making the task relevant, their very
existence can have significant impact. It is generally seen that
individuals who work hard are those who actually enjoy their
jobs. A measure that requires massive attention is how to
make work meaningful and pleasurable.
  Changing the procedures and processes – This simplification
of the processes and procedures is important to ensure
accountability in public life. In fact, the process has come to
dominate the name of accountability.
 Changing the perceptions of the purpose – This third idea
should be the very orientation of the whole bureaucratic
system towards the purpose – be it rapid growth or social
justice. It should be participative wherein those who are in
charge of implementation are also the conscious participants
of the policy formulation. They should own the policy and have
a sense of belonging to the system.
 Using the latest technology – And this last action measure
should aim at tapping new technologies. This, of course,
should be done very consciously. Technology is also social
relationship. Therefore, corporation of technology should see
to it that the new organizational culture is internalized. Given
the judicious mix of use of technologies and comparability of
human sensibilities, it should be possible to enhance the
bureaucratic capabilities.

2. It is an accepted principle among practitioners that the management

of human resources is not an exact science. Nevertheless, since
management of people must be integrated with the management of
an organization, whether public or private, it is primarily the function
and responsibility of all levels of management. How can an
understanding of the principle help a management consultant in
developing a personnel development program that will enhance
motivation and productivity of employees. Discuss from the following
dimensions:
A. Relationship of employees with the organization.
ANSWER:
The employee-organization relationship (EOR) is a construct
for examining the complex perceptions of both employees and
employers/managers and their expectations of one another in
the workplace. Based in social exchange theory (and economis
 exchange theory) and the inducements-contributions model,
study of the EOR enables scholars and professionals to analyze
the contributions of internal communications and
organizational development practices on productivity,
employee engagement, satisfaction and organizational trust.
Employee-organization relationships, by way of impact on
these concepts, affect internal and external organizational
outcomes.
B. Relationship with top management.
ANSWER:
A relationship between the top management and employees
can greatly impact the overall business and its success. Here’s
5 reasons why:
 PRODUCTIVITY is what will get a company to achieve its
goals. Companies that pay attention to their employees
have a benefits from bigger profits. Organizing team
building activities or providing recreational room can
help you create a better relationship with your
employees. It will also help them relax with their
stressful days at work and feel more appreciated.
 LOYALTY- an engaged employee will help you attract not
only more talented and expert individuals to work for
you, but they will also become brand ambassadors. This
means that they will promote your values and products
with utmost belief in them and thus provide you with
the best marketing. To achieve this kind of behavior, you
have to show your employees that you respect them.
C. Relationship with the lower levels of management.
ANSWER:
The lower levels of your organization must take upper-decision
seriously. Workplace misconduct, for example, must result in
serious consequences. On the other hand, browbeating
employees won’t create environment conducive to excellence.
Your goal should be to ensure the lower levels of your
organization respond well to the directions of supervisors, who
 in return should be reasonably responsive to employee
concerns.

In our complex economy, the jobs people have and the value society
places on them determines productive capability and self – esteem.
Behind a person’s decision to accept or refuse to take a job, or his
decision to quit one is not a simple impulse or value choice but a
complex combination of assessments of objective reality on one
hand and the values, attitudes, and beliefs drawn from different
levels of his experience, on the other.

As the Executive Director of an international agency engaged in

technical and vocational training of informal settlers in the Asia
Pacific Region, develop a training program for women welders for
possible employment in the Middle East.

3. One dimension of administration reform pertains to the need to

change or reorient the behavior and even value systems of the people in
the bureaucracy. Philippine Administrative history has seen programs
aimed precisely at that. Various implementing training programs for
various levels of bureaucracy. Also built into there training efforts are
methodologies to immerse the bureaucrats in local situations. But it is
common knowledge that in spite of all these efforts the bureaucracy has
essentially remained the same.
From the point of views of a development administration student,
discuss the problem/s with possible recommendations to improve the
situation.
ANSWER:
 An administrative reform is a conscious, well-considered changed
that is carried out in a public sector organization or system for the
purpose of improving its structure, operation or the quality of its
workforce. Change and reform are both essential for every system
and especially very important for public administration. But the
essentiality of reform does’ not mean that its attainment and
implementation are very easy tasks and naturally can be smoothly
implemented. Here lies the problem of administrative reform.

1. The situation for administrative reform appears to be

imminent. The prevailing system of public administration is
unable to cope with the changes that have engulfed the society.
In other words, there has developed a very big gap between the
capacity of public administration and the growing demands and
requirements.

2. The administrative reform is not a day to day affair. That is,

public administration cannot be reformed frequently. When to
reform and how much to be reformed pose big problems and
these cannot be solved easily. The authority will start reforming
public administration when the necessity will be fully ripe. Men
will ardently desire a reform in public administration. But here is
a problem again. A section of the society wants reform while the
other section may feel that it is unnecessary. The reconciliation
between the two opposing groups may prove an impossibility.

3. A reform must be a long-term process. But the problem is it is

not possible for the administrators to anticipate the future. The
result is today’s reform may appear to be irrelevant in the near
future. But an administration cannot be reformed frequently.
None can overcome this problem. Reform is essential and future
irrelevancy is certain.

4. An important objective of administrative reform is to ensure

the support of the clients for the reform and participation of
people in administration. Here lies a very big problem. Without
people’s support a reform proposal can never be executed.
Particularly in a country where there are large number of parties
and the relation between them is far from cordial. When the
party in power proceeds to introduce certain reforms in public
administration other parties will or may object.
 In the light of the above analysis we say that the success of
administrative reforms depends upon certain preconditions and
some are briefly stated:

1. The authority must be serious and sincere about the reforms.

That is, the authority is adamant that for the betterment of society
public administration must be reformed.

2. The authority is sure that the reforms in public administration

will bring about desired and improved results. If not, the authority
should not try to reform.

The authority, through its machinery, should try to gauge the

attitude or mentality of the people about the reform proposals. In a
democracy nothing can be imposed upon the people by applying
coercive measures. The authority shall try to anticipate what people
actually want and what the reforms are prepared to offer. There shall
be a conciliation between the two.

The authority must be able to prove or establish that the present

form of public administration is not able to satisfy the requirements
of the general public. The public will also agree with the authority.
When this happens, administrative reform will be able to achieve
success. There is also the problem of implementation. For the
successful implementation of reform, an efficient government
machinery is essential.

People’s cooperation is also deemed as a precondition. Even

various forces -both national and international may try to scuttle the
reform proposals. In this regard utmost alertness on the part of
authority is required. Finally, we hold the view that it is the duty of
the authority to create a favorable atmosphere for the reform
proposals so that the general public can accept it easily.

 Bureaucracy helps enable both larger and more left-wing government

because that kind of government accords with the preferences of most
bureaucrats and makes them better off. Even when the President leans
to the political right, permanent government of the left provides a
powerful counterweight to his objectives.
The political beliefs of the median federal government employee lie to
the left of both the median Republican and the median Democrat. In
some departments, like the Environmental Protection Agency or the Civil
Rights Division, the effect is particularly pronounced. Missions of such
intensity often attract those of missionary zeal.
An administration in favor of limited government might try to hire more
conservative civil servants. But selection bias and other factors make
such an effort unlikely to succeed. Too overt consideration of ideology
could run afoul of the law and result in charges that the administration is
politicizing the civil service.
Bureaucrats' interest in status means they are likely to push to expand
the jurisdiction and power of their departments. While expansive
regulation is likely to reflect the preferences of most bureaucrats
anyway, this effect works independently of preferences.
The more intrusive regulations are, the more agency officials will earn in
the private sector by helping businesses manage their way around them.
The revolving door is not only a generator of conflict of interests, but a
gateway to the larger state. It also creates better outside employment
options for agency employees.
HERE ARE A FEW SOLUTIONS:
- Conservatives and libertarians should be reluctant to delegate power
that is likely to be exercised in a liberal direction. Lawmakers should
demand a statute several degrees to the right of where they think it
should be if there is a delegation because the bureaucracy will move it
to the left.
- Congress should pass the REINS Act, which would require a
Congressional vote under fast track procedures to approve major
agency rules before they become law. This act would transfer power
currently held by bureaucrats back to legislators. People on the left
realize that it could not be enacted until the next era of unified
Republican government.
- Cost benefit analysis could be required by law, unless specifically
exempted in a statute. This tool constrains agencies, by requiring
bureaucrats to show that regulations have net benefits. OMB reviews
 all cost benefit analyses, which provides a check on the parochial
regulatory expansion of agencies.
- Article III judges are not perfect, but they are far less ideologically
skewed than bureaucrats, and have no pecuniary or status incentives
to expand their work. Subject cost benefit analysis to judicial review
would increase the seriousness with which it is taken and further
weaken the power of bureaucrats.
- Bring independent agencies within Presidential control. As I stated
in the previous post, Presidents have modest powers to recalibrate
the bureaucracy, but these powers are even weaker at independent
agencies which are insulated from their control.
- My co-blogger Mike Rappaport once suggested to me that each
agency have a unit devoted to deregulation. His is a very sensible
idea, not least because it might attract a different kind of personnel–
people more sympathetic to the market than top-down government
control.
- Privatize where possible. Privatization has often been sold as way of
gaining efficiency in the bureaucracy. But it can also bring in
personnel who skew less ideologically to the left.

4. Whatever the task – training, motivation or performance review – the

success depends on the manager’s recognition, understanding and
adaptation of tasks to each individual’s cultural values. In our multi-
cultural society, those engaged in managing people is faced the task of
developing organizational human resources.
Discuss the various cultural elements and contrasts which must be
considered in developing and implementing such tasks.
ANSWER:
An organization's culture defines the proper way to behave within the
organization. This culture consists of shared beliefs and values established by
leaders and then communicated and reinforced through various methods,
ultimately shaping employee perceptions, behaviors and understanding.
Organizational culture sets the context for everything an enterprise does. Because
industries and situations vary significantly, there is not a one-size-fits-all culture
template that meets the needs of all organizations.
A strong culture is a common denominator among the most successful
companies. All have consensus at the top regarding cultural priorities, and those
values focus not on individuals but on the organization and its goals. Leaders in
successful companies live their cultures every day and go out of their way to
communicate their cultural identities to employees as well as prospective new
hires. They are clear about their values and how those values define their
organizations and determine how the organizations run.
Conversely, an ineffective culture can bring down the organization and its
leadership. Disengaged employees, high turnover, poor customer relations and
lower profits are examples of how the wrong culture can negatively impact the
bottom line.
Mergers and acquisitions are fraught with culture issues. Even organizational
cultures that have worked well may develop into a dysfunctional culture after a
merger. Research has shown that two out of three mergers fail because of
cultural problems. Blending and redefining the cultures, and reconciling the
differences between them, build a common platform for the future. In recent
years, the fast pace of mergers and acquisitions has changed the way businesses
now meld. The focus in mergers has shifted away from blending cultures and has
moved toward meeting specific business objectives. Some experts believe that if
the right business plan and agenda are in place during a merger, a strong
corporate culture will develop naturally.

What Is Organizational Culture?

An employer must begin with a thorough understanding of what culture is in a
general sense and what their organization's specific culture is. At the deepest
level, an organization's culture is based on values derived from basic assumptions
about the following:

 Human nature. Are people inherently good or bad, mutable or immutable,

proactive or reactive? These basic assumptions lead to beliefs about how
employees, customers and suppliers should interact and how they should
be managed.
  The organization's relationship to its environment. How does the
organization define its business and its constituencies?
 Appropriate emotions. Which emotions should people be encouraged to
express, and which ones should be suppressed?
 Effectiveness. What metrics show whether the organization and its
individual components are doing well? An organization will be effective
only when the culture is supported by an appropriate business strategy and
a structure that is appropriate for both the business and the desired
culture.

Culture is a nebulous concept and is often an undefined aspect of an organization.

Although extensive academic literature exists relating to the topic of
organizational culture, there is no generally accepted definition of culture.
Instead, the literature expresses many different views as to what organizational
culture is.
Organizational culture can manifest itself in a variety of ways, including leadership
behaviors, communication styles, internally distributed messages and corporate
celebrations. Given that culture comprises so many elements, it is not surprising
that terms for describing specific cultures vary widely. Some commonly used
terms for describing cultures include aggressive, customer-focused, innovative,
fun, ethical, research-driven, technology-driven, process-oriented, hierarchical,
family-friendly and risk-taking.
Because culture is difficult to define, organizations may have trouble maintaining
consistency in their messages about culture. Employees may also find it difficult to
identify and communicate about perceived cultural inconsistencies.
HOW CULTURE DEVELOPS
An organization's customs, traditions, rituals, behavioral norms, symbols and
general way of doing things are the visible manifestation of its culture; they are
what one sees when walking into the organization. The current organizational
culture is usually due to factors that have worked well for the organization in the
past.
Founders typically have a significant impact on an organization's early culture.
Over time, behavioral norms develop that are consistent with the organization's
values. For example, in some organizations, resolution of conflicts is hashed out
openly and noisily to create widespread consensus, whereas in other places
disputes are settled hierarchically and quietly behind closed doors.
Though culture emerges naturally in most organizations, strong cultures often
begin with a process called "values blueprinting," which involves a candid
conversation with leaders from across the organization. Once the culture is
framed, an organization may establish a values committee that has a direct link to
leadership. This group makes sure the desired culture is alive and well. For values
blueprinting to work, organizations must first hire people who live the values and
have the competency needed to perform the job.
SUSTAINING A CULTURE
The management of organizational culture starts with identifying a company's
organizational culture traits or "artifacts." Artifacts are the core business
activities, processes and philosophies that characterize how an organization does
business day-to-day.
Identifying these traits—and assessing their importance in light of current
business objectives—is a way to start managing culture. Three broad concepts
help identify the traits specific to a culture:

 Social culture. This refers to group members' roles and responsibilities. It is

the study of class distinctions and the distribution of power that exists in
any group.
 Material culture. This involves examining everything that people in a group
make or achieve and the ways people work with and support one another
in exchanging required goods and services.
 Ideological culture. This is tied to a group's values, beliefs and ideals—the
things people view as fundamental. It includes the emotional and
intellectual guidelines that govern people's daily existence and interactions.

Leaders and managers within an organization should approach culture

management by initially gaining an understanding of the common traits found in
all businesses. Then, they should take the following steps to manage their
organization's culture:

 Identify common artifacts or traits, including those from the standpoint of

an organization's social, material and ideological culture.
  Convene groups of employees—representatives from all levels, functions
and locations of the organization—to assess the validity, significance and
currency of key artifacts.
 Subject those traits to a rigorous assessment of their underlying shared
assumptions, values and beliefs.
 Summarize findings and share them with all participants to solicit additional
insights.
 Create a culture management action plan. The plan should enhance traits
that support corporate growth or organizational effectiveness and correct
traits that might hinder a company's advancement.

Typically, shared assumptions and beliefs originate with an organization's

founders and leaders. Because those beliefs proved successful (otherwise the
company would not exist and the leaders would not be in their positions), often
they go unchallenged; however, those assumptions and beliefs might be outdated
and may hinder future success.
5. The Mayor of the City of Malolos where the plant ZTE Corporation, a
multinational company, is located sent to Mr. Charles Bronson, the
recently appointed Country Resident Manager of the corporation, his
personal Secretary with the husband of the City Treasurer and City
Assessor, and the Secretary and the two men arrived at the company
compound in a police car. The Secretary told Mr. Bronson that the two
men were “compromise” recommendees of the city mayor and the
congressman, known political allies of President Duterte.
Mr. Bronson referred the matter to you, the Personnel Officer. How will
you handle the situation? How will you explain the “complexity” of the
situation to Mr. Bronson? What will be your recommendation?
Advanced Marketing Management
1. Ethics is critical to all aspects of global business. With this in mind, critically
evaluate the concept of ethics in Marketing strategic marketing management,
identifying the issues and benefits of ethical practice using business/marketing
examples to justify your answer.
ANSWER:
CONCEPT OF ETHICS IN MARKETING STRATEGIC MARKETING MANAGEMENT
ETHICS are a collection of principles of right conduct that shape the decisions
people or organizations make. Practicing ethics in marketing means deliberately
applying standards in fairness, or moral rights and wrongs, to marketing decision
making, behavior, and practice organization. In a market economy, a business
may be expected to act in what it believes to be its own best interest. The
purpose of marketing is to create a competitive advantage. An organization
achieves an advantage when it does a better job than its competitors at satisfying
the products and service requirements of its target markets. Those organizations
that develop a competitive advantage are able to satisfy the needs of both
customers and the organization.
ISSUES:
Ethical marketing decisions and efforts should meet and suit the needs of
customers, suppliers, and business partners. Unethical behavior such as price
wars, selective advertising, and deceptive marketing can negatively impact a
company's relationships. Recent trends show that consumers prefer ethical
companies.
1. Gifts, gratuities, bribes (marketing 3. Dishonest advertising (marketing
and sales) and sales)
2. Price discrimination and unfair 4. Miscellaneous unfair competitive
pricing (marketing and sales) practices
 5. Cheating customers, unfair credit 7. Dishonesty in making or keeping a
practices, and contract
overselling (marketing and sales) 8. Unfairness to employees and
6. Price collusion by competitors or prejudice in hiring
price fixing (marketing and sales)
BENEFITS:
There are numerous benefits to both company and society from ethical marketing
practices. Some of the primary benefits include:
 Reputation - Companies that market consistent with ethical norms or
expectations build a positive reputation with the public.
 Customer Satisfaction/Loyalty - Delivering a product that is consistent with
advertising establishes trust or confidence with customers. This results in
customer happiness and generates return customers based upon loyalty to
the product, company, or brand.
 Increased Sales - Ethical marketing campaigns generally have a better long-
term effect on sales. Unethical practices tend to be discovered and have a
short-term effect at best.
 Improved Standard of Living/Health - The overall sense of fairness and
equity that results from ethical business practices (particularly marketing),
results in an overall improved standard of living for customers.

2. Critically evaluate Porter’s 1980 generic strategies framework.

ANSWER:

Section A – Porter’s Generic

Strategies: Mock Answer 1
Introduction
Strategy can be formally envisioned as
a hierarchy reflecting the
organisational structure of
multidivisional
corporations (Grant, 1998) in which
corporate strategy states the general
direction that the organisation will
follow, while business strategy is a
formulation of how the business unit
intends to compete in its business
sector. (Dostaler, 2006)
Key Models
Porter’s (1980) develops three
potential
successful generic strategies for
creating a
defensible position and outperforming
competitors in a given industry.
1. Cost Leadership: This emphasises
low
cost relative to competitors
2. Differentiation: Requires that the
firm
creates a product/service that is
recognized industry wide of being
unique.
Allowing it to command higher than
average prices.
3. Focus: This is where the firm
concentrates on a particular segment
of customers or geographic markets.
However, Porter states that firms must
avoid characterization of being ‘stuck
in the middle’, this is due a latter
class of firms failing to develop any
one of these strategies. As a result, can
guarantee ‘low profitability’.
Section A – Porter’s Generic
Strategies: Mock Answer 1
Introduction
Strategy can be formally envisioned as
a hierarchy reflecting the
organisational structure of
multidivisional
corporations (Grant, 1998) in which
corporate strategy states the general
direction that the organisation will
follow, while business strategy is a
formulation of how the business unit
intends to compete in its business
sector. (Dostaler, 2006)
Key Models
Porter’s (1980) develops three
potential
successful generic strategies for
creating a
defensible position and outperforming
competitors in a given industry.
1. Cost Leadership: This emphasises
low
cost relative to competitors
2. Differentiation: Requires that the
firm
creates a product/service that is
recognized industry wide of being
unique.
Allowing it to command higher than
average prices.
3. Focus: This is where the firm
concentrates on a particular segment
of customers or geographic markets.
However, Porter states that firms must
avoid characterization of being ‘stuck
in the middle’, this is due a latter
class of firms failing to develop any
one of these strategies. As a result, can
guarantee ‘low profitability’.
Porter’s (1980) develops three potential successful generic strategies for creating
a defensible position and out performing competitors in a given industry.
1. Cost-Leadership: This emphasizes low cost relative to competitors
2. Differentiation: Requires that the firm creates a product/service that is
recognized industry wide of being unique. Allowing it to command higher
than average prices.
3. Focus: This is where the firm concentrates on a particular segment of
customers or geographic markets.
However, Porter states that firms must avoid characterization of being
‘stuck in the middle’, this is due a letter class of firms failing to develop any
one of these strategies. As a result, can guarantee ‘low profitability’.
- A criticism is that cost cannot always be completely ignored by
management, especially when making the distinction between
differentiation and cost. Most companies will not admit that their
product is not essentially the same as that of others.
- Porter’s strategy is only part of the broader picture and should be
used as a starting point. It does not provide relevant strategic routes
in the case of fast growing markets.
- There is a concern for smaller firms as the choice of strategy is much
bound by the size of the firm and the access it has to resources.
Section A – Porter’s Generic
Strategies: Mock Answer 1
Introduction
Strategy can be formally envisioned as
a hierarchy reflecting the
organisational structure of
multidivisional
corporations (Grant, 1998) in which
corporate strategy states the general
direction that the organisation will
follow, while business strategy is a
formulation of how the business unit
intends to compete in its business
sector. (Dostaler, 2006)
Key Models
Porter’s (1980) develops three
potential
successful generic strategies for
creating a
defensible position and outperforming
competitors in a given industry.
1. Cost Leadership: This emphasises
low
cost relative to competitors
2. Differentiation: Requires that the
firm
creates a product/service that is
recognized industry wide of being
unique.
Allowing it to command higher than
average prices.
3. Focus: This is where the firm
concentrates on a particular segment
of customers or geographic markets.
However, Porter states that firms must
avoid characterization of being ‘stuck
in the middle’, this is due a latter
class of firms failing to develop any
one of these strategies. As a result, can
guarantee ‘low profitability’.
3. Advocate of the resource-based view argue “organizations that are in
possession of unique resources have the basis for superior performance
advantage over its rivals”
Critically analyze this approach to achieving a competitive advantage