Is Porter wrong?

In the 1980s, Michael Porter presented the “generic strategies” – which consist of three basic strategies of cost leadership, differentiation strategy and niche strategy. He argued that these three strategies were the only fundamental strategies that any organisation could undertake (thereafter the term “generic strategies”).

However, as discussed earlier in this blog, Porter has been challenged in his view in the later years and I came to think about these generic strategies as I am currently analysing a Polish real estate company as a part of a strategy course at the university.

As the organisations are using standardized material producing standardized products, organisations are finding it difficult to differentiate themselves from each other. Furthermore, apart from the building process itself, the largest share of their costs come from acquiring building locations.

Acquiring prime locations is also identified as a key success factor in this industry, meaning that companies buying less expensive land (less attractive locations) will not be able to sell their products at the average price of the market – meaning a low-cost leadership is close to impossible.

At last, the buyers (in this case Property Investment Funds) are only looking for investment opportunities which will give them a predictable return of investment at a low risk, so where are the niche markets?

Before writing this post I read even more about Porter’s generic strategies, and I always end up with the same conclusion: Generic strategies are more suited for B2C markets than B2B markets.

Porter (left): "By making the buildings smaller, real estate 

companies could gain low-cost leadership"