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A standard definition of strategy is "A high-level plan to achieve the goals under uncertain conditions." Michael Porter wanted to understand the drivers of success in commercial organizations. His research evidenced that industry structure mattered more than firm behavior, and his five forces model (1979) offers his explanation of the sources of competition at the industry level. By combining price and market type, Porter suggests the following competitive strategies:

  • cost leadership,
  • differentiation,
  • cost segmentation/focus (that he further divided into cost and differentiation focus),

These strategies can be used to determine the direction of an organization.

However, these strategies do not come without criticism 

It is argued that all the strategies defined by porter may not be suitable for every firm. Sometimes a single strategy adopted would yield results, or a mixture of these would be beneficial. They depend on several variable factors, such as the organizational structures, the skills of employees. control procedures in place etc. (Ouma and Oloko 2017) . Porter's strategies are deemed to be firm-specific only, which addresses alone a specific situation and time. They do not set a guideline for a changing business environment or for businesses that operate in a dynamic environment(Moon, Hur et al. 2014)

Mechanistic and organic organizations are opposites of organizational structure possibilities. Mechanical organizations are efficient, rigid, predictable, and standardized organizations. Accurately, mechanistic organizations are characterized by a strict hierarchy, high levels of formalization, a heavy reliance on rules, vertical specialization, centralized decision making, and narrowly defined tasks (Hunsaker, 2018). In contrast, organic organizations are flexible, adaptable, and team directed. In particular, organic organizations are characterized by weak or multiple hierarchies; low levels of formalization; loose rules, policies, and procedures; horizontal specialization; decentralized decision making; communication flows in all directions; and fluidity of tasks adaptable to changing conditions. 


2.1 Porter’s four competitive strategies

2.1.1 Cost leadership strategy

Cost leadership strategy is achieved by focusing on the efficiency levels where the goal is to produce high volumes of output, which would lower costs through economies of scale. However, having a large market share or preferential access to production factors is necessary to keep competitors from copying the adopted strategy. (Tanwar, 2013)

Organizations that attempt to produce their goods at the lowest cost in an industry can be referred to as those following a cost leadership strategy. Organizations with the lowest costs associated with their outputs would earn the highest profits assuming that the market the entity is competing in consists of products mostly undifferentiated and sold at a standard market price (Kuijk, 2018). The main objective of these entities is to reduce costs at all steps of their supply chain in an effort to reduce or remove all cost overheads, provided that it can do so without a significant hit to the quality of the product offered. It is necessary to note that cost leadership does not necessarily mean that the entity's products will be available at the lowest price. There are some instances where an object offers the products are an average market price and pockets the profits earned due to being a cost leader.

However, a noticeable downside of adopting a cost leadership strategy is that the company focuses on reducing costs, sometimes at the expense of other vital factors, which may become so dominant that the company loses vision of why it embarked on one such strategy in the first place.

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