Sunday, January 17, 2010

Middle of the road competitive strategy

Firms which do not have a clearcut competitive strategy end up having a middle of the road strategy which only harms them in the long run. Such firms try to adopt both overall cost leadership and the differentiation strategy. However, they only damage their profits and reputation in such a venture. For example, when Home Depot started, it had the lowest prices and the the best product selection. However, it had to decide in the end whether it wants to have a cost leadership or a differentiation strategy.

Middle of the road strategy also resembles more for less positioning strategy because in a more for less strategy, a firm tries to offer a good quality product or service having a low price which only harms the firm's position in the long run. A firm should clearly decide what type of competitive strategy it wants to adopt. A middle of the road strategy only stops the firm from reaching its potential.