Future Group diversified into numerous sectors like insurance, financial services, and real estate, expanding too quickly without a strong financial foundation in its core retail business. The rise of strong competitors like Reliance Retail and online platforms like Flipkart and Amazon put pressure on Future Group’s market share and revenue. Covid 19 lockdowns and store closures during the pandemic severely impacted operations and cash flow, forcing Future Group to default on its debts. This proved to be the final blow, as it left no path to recovery.  The lesson to be learned is that a strategic, well-researched diversification plan is crucial for success, ensuring that new ventures offer profitability and are sustainable.

Strategies fail due to poor execution, which shoots from factors like lack of leadership commitment, poor communication, inadequate employee engagement, and a disconnect between strategy and operations. Designing a strategy is one thing but implementing and executing it is more important. Organizations fail strategically when they carry unrealistic goals, inadequate resources, a failure to adapt to changing circumstances, internal misalignment of processes, and a general lack of capability building to support the strategic objectives.  Some of the reasons why strategies fail is as follows:

Execution Problems

The failure of strategy execution is a common and costly issue in organizations today. While there are many reasons why leaders struggle to translate strategy into action, common themes include a disconnect between strategy and operations, overemphasis on internal matters, lazy leading, and a lack of accountability. Kodak invented the first digital camera but failed to execute its strategy to transition fully to the digital market. The company refused to hold its digital strategy for fear of harming its existing, highly profitable film business. This led to a significant loss of market leadership to competitors who adapted to the new digital landscape. Kodak’s decision making delayed the execution, the firm kept on procrastinating its digital strategy. 

Poor Implementation

This is the most common reason for failure; plans are often developed but not properly operationalized or tracked. Lack of timely implementation and misjudging market scenario are some of the reasons why strategies fail. Motorola largely “failed” by missing crucial innovations in the transition from early mobile phones to smartphones, including a slow adoption of 3G technology and the rise of touch-screen devices, leading to a loss of market share to competitors like Nokia, and later, Apple and Samsung. Other factors included internal issues like frequent management changes, a bureaucratic structure, and a failure to innovate beyond their successful Moto Razr line, which was followed by a period of declining product quality and market relevance before its acquisition by Google and later Lenovo, which marked a shift toward low-cost Android phones.

Lack of Alignment

This occurs when departments and employees don’t understand how their work contributes to the overall strategy, leading to wasted effort. eBay is an online auction site where companies and individuals bid on products. eBay represents another strategic planning failure example where a merger was the cause. In 2005, eBay decided to merge with Skype, thinking it would enhance their business. However, the values and systems of the two firms did not integrate well with each other. In 2009, eBay reversed the merger but already experienced significant decreases in stock.

Inadequate Resource Allocation

This can sabotage execution, as teams lack the necessary budget, staff, or technology to achieve their goals. Subhiksha, a prominent Indian retail chain, pursued an aggressive expansion strategy to quickly increase its market share and mark. The rapid expansion was not backed by adequate capital support or robust operational systems. The company expanded faster than its financial resources could sustain, leading to a collapse. This is a clear example of a strategy failing because the necessary financial resources and operational resources.

Leadership and Culture Issues

Insufficient Leadership Commitment is the biggest danger. Also focus on perks over vision can undermine strategy, sending a negative message throughout the organization. An example of how poor leadership can cause organizational strategy failure in India is Satyam Computer Services, where its founder, Ramalinga Raju, engaged in financial fraud and made unethical decisions that led to the company’s downfall and required a forced sale. In the case of Satyam, Ramalinga Raju’s decision-making and lack of ethics led to a massive financial fraud, undermining any articulate strategy the company might have had. Ramalinga Raju’s failure was the massive corporate fraud at Satyam Computer Services, where he, as founder and chairman, fabricated company accounts to inflate share prices and misappropriate money, leading to the company’s collapse and his imprisonment. The fraud, revealed by Raju’s confession in 2009, was discovered after the collapse of the Hyderabad property market exposed the company’s financial irregularities and ultimately resulted in the acquisition of Satyam by Tech Mahindra.

Poor Communication

This prevents employees from understanding and internalizing the strategy, making it difficult for them to act on it. Kingfisher Airlines, owned by liquor baron Vijay Mallya, was once a prominent Indian airline. However, the company faced a major crisis in 2012 when it suffered severe financial difficulties, leading to grounded flights, unpaid employees, and mounting debts. The company’s key stakeholders, including employees, customers, and regulators, did not engage during this crisis. Non-transparent and ineffective communication further damaged the brand’s reputation and contributed to the eventual downfall of the airline.

Toxic Organizational Culture

Can hinder strategic efforts, creating struggle to change and a lack of collaboration. A big example of a specific failed company due to toxic culture is elusive, reports highlight BYJU’S as an Indian company with a toxic, forced sales culture, contributing to widespread negative employee experiences and potentially contributing to its significant failures and downfall. Reports of a toxic organizational culture at Byju’s is cited as a reason for worker dissatisfaction and contributing to the company’s overall struggles, according to World Journal of Advanced Research and Reviews. The company has undergone significant restructuring, including mass layoffs and the closure of almost all its office spaces in India, to reduce costs and streamline operations.

Failure to Adapt

 Adaption to surrounding and market is very important for organizational survival. Bisleri, a household name synonymous with bottled water in India, decided to tap into the booming carbonated beverage market in 2006 with the launch of Bisleri Pop.  However, their established brand identity didn’t translate well to this new category. The branding of Birleri as clean drinking water had built its reputation on trust and purity. Consumers associated the brand with clean, healthy drinking water. Launching sugary sodas under the same brand name created confusion. Why would a company known for its commitment to pure water be making sugary drinks? Consumers remained hesitant to embrace Bisleri Pop. Consumers couldn’t adapt to Bisleri’s Pop sugary soda.

Conclusion

Brands often fail due to poor strategies. Some of them are failures to innovate, understand their target audience, adapt to market trends, and execute plans effectively. Examples like Kodak, which missed the digital photography revolution, and Kingfisher Airlines, undone by reckless expansion and poor finances, highlight how flawed strategic planning can lead to a brand’s downfall.

Dominant: A firm is in a dominant position, has control over other competitors. Dominance in the market gives a firm chance to enjoy more freedom to select suitable strategic options.

Strong: A strong firm doesn’t control behaviour of other competitors, but can take independent actions without jeopardizing its long-term position. But, other competitors’ actions do not have a notable impact on its position.

Favorable: These firms are in position to exploit opportunities to improve their positions. They need to constantly adjust their strategies to continue enjoying the better-than-average opportunities for which they have to remain alert and struggle constantly.

Tenable (Average): These firms have satisfactory performance, but they suffer due to dominant and strong competitors. These firms have less-than-average opportunities to improve their positions.

Weak: Weak firms have unsatisfactory performance. However, they need to keep a watch on opportunities to improve their positions. Weak firms must change or adjust constantly to exist.

Nonviable (non-survivable): Such firms have unsatisfactory performance and have no opportunity to improve their performance and position.

Depending on the position of firms in market, there are four types of market dominance strategies. These are market leader, market challenger, market follower, and market nicher.

Market leader: Market leader has the largest market share in the relevant product in the industry. It has a dominant position in the market. Obviously, it leads in new product development, price change, distribution coverage, promotional activities, and novel experiments. The leader may or may not be respected by other firms, but other firms have to acknowledge its dominance. Other firms can challenge, follow or avoid the market leader. In India, well-known market leaders are Maruti Suzuki in cars, Hero Honda in two-wheelers, TCS in Information Technology, HDFC in Banking, Hindustan Unilever in consumer goods, Coca-Cola in soft-drink, McDonald’s in fast food, Life Insurance Corporation in life-insurance etc.

A few market leaders enjoy monopoly in the market. They need to remain alert all the time for maintaining their leadership position. Other firms constantly challenge leadership position. A little mistake here and there can force the leader into second or third position. It has to adopt innovative practices in all the marketing areas. Sometimes, it has to incur excessive costs to maintain the number-one position.

A leader position firm which desires to maintain market- leader position has to adopt one or more strategies such as Expanding Total Market, Defending Current Market Share and Expanding Certain Segment Market Share. To remain a leader the firm needs to remain alert in market.

Market challenger: Market challengers are known as runner-up firms. They occupy second, third or lower ranks in an industry. Bajaj Auto in two-wheelers, Tata Motors and Hyundai in cars, Reliance Petro and Essar Oils in refineries challenging ONGC, Pepsi-Cola in soft-drink, Procter and Gamble in consumer goods, Vodafone in cellular service providers, Sony and Samsung in cell-phone instruments, etc., are some of the market challengers in India.

Market challengers are capable to attack the leader and other competitors. Sometimes, capable challengers can overtake the leader. Market challengers also target smaller, more vulnerable competitors. The fundamental principles involved are: to assess the strength of the target competitor, keep searching opportunities to attack the target, to keep a watch on the amount of support that the target might muster from allies. Challengers usually choose only one target at a time. Challengers prefer to attack the target at a vulnerable moment. Challengers usually launch the attack on narrow front.

Usually challengers adapt these strategies: price discounts or price cutting, line extensions, introduce new products, reduce product quality to cut on costs, increase product quality, improve services, change distribution strategies and intensify promotional activity.

Market follower: These firms prefer to follow leader rather than to use new strategies and waste energy and resources. They do not face the leader directly. Some followers are capable to challenge but they prefer to follow. However, market followers always react strongly in case of any loss. In some capital goods industries like steel, cement, chemical, fertilizer, etc., product differentiation is low, service qualities are similar, and price sensitivity is high. They decide to provide similar offers by copying the market leader. But, one glaring fact is that followership is not always satisfying path to pursue.

Market followers prefer to follow the leader doesn’t mean that they don’t require specific market strategies. They cannot be simply passive or simply carbon copy strategies adopted by leaders. They need to hold current customers and win a fair share of new customers. Followers usually keep manufacturing cost low and offer better quality products with satisfactory services. At the same time, they do enter new markets as and when there are opportunities. Market followers are bound to exist in a mature market. The market followers are wider in case of online marketing because online marketing has lower entry barriers and higher returns. Thus, in online commerce itself, you will see that companies like Snapdeal, Flipkart, Jabongg have all started one after the other. Off course, the market leaders were Ebay and Amazon. And, today e-Bay and Amazon are facing tough competition.

It is a simple way to follow the leader. The follower who wants to be imitator duplicates the leader’s product as well as package and sells it in the market through disrepute distributors. Products are marketed secretly to avoid legal complications. The product seems exactly similar to original product except basic quality and features. This is common strategy in auto-parts and electronics products. People, knowingly or unknowingly, buy such duplicate products as they are made available at low price.

They can also me Emulators. The emulator clones (emulates) the leader’s products, distribution, advertising and other aspects. Here, product and packaging may be identical that of leader, but brand name is slightly different. Market is full of cloned products especially in interiors of the country. You will find bottled water with labels of Bisleri, Aquafina; toothpaste tubes with Colgate, Cibaca labels but then the packaging is of inferior quality. This strategy is widely practiced in computer business also. The cloned products are openly sold in the market because of fake practices. The fake brands are pushed in the distribution of firms.

Market specialist or nicher: A niche is a more narrowly defined small market (limited number of buyers) whose needs are not being well-served by existing sellers. It is a small segment that has distinctive needs and is, mostly, ready to pay high price. Marketers can identify niches by dividing a segment into sub-segments or by dividing a group with a distinctive set of traits.

They may seek a special combination of benefits. Niches (small groups of buyers) are fairly small and normally attract a few competing firms. A nicher is the small firm serving only small specific groups of customers. The firm’s marketing efforts to serve the niches successfully is called nichemanship.

Nichers understand their niches’ needs so well and minutely that their customers are willing to pay a premium price. They design special products with distinctive features, qualities, uses, and value for special group which are tailor-made to suit the buyer’s needs. Nichers have special skills to serve their market in luxury goods segment and fashion industry. They gain certain economies through specialization. Nichemanship strategy is also called focus strategy. The objective is focusing marketing efforts on one or few narrow market segments and tailoring the marketing mix to give those chosen customers tailored offer. The firm typically looks to gain a competitive advantage through effectiveness. The most successful nichers tend to have the following characteristics:

• They tend to be in high value (luxury goods) industries and are able to obtain high margins.
• They tend to be highly focused on a specific market segment.
• They usually market high end products and are able to use a premium pricing strategy.

Conclusion: Today, the market scenario is so susceptible to the environmental vulnerability that many companies live a very short lifecycle.  The acronym VUCA has shaken the world. Political, economical, social, technological, legal and environmental parameters in the world have become Volatile, Uncertain, Complex and Ambiguous than ever before. Therefore, no company can take its position in market for granted. Though for many people the term VUCA is linked to negativity, but, a new wave of thinking shows that embracing vulnerability is actually crucial for sustainability of businesses.

Organizations around the globe develop strategic plans. They carefully create a vision of their future and the strategies needed to get there. But many fail to realize their vision and fail to deliver the expected strategic results. There is an old adage that ‘if you fail to plan you plan to fail’. This certainly holds true in the business world, in daily business endeavors, and even in our personal lives. When organizations and people have a plan simply for plan’s sake, things go wrong from the beginning. Organizations fail when they spend money, resources, manpower without direction. Another common mistake organizations do is they plan a strategy without understanding the environment or focusing on results. Managers must pay attention to changes in the business environment, set meaningful priorities, and understand the need to pursue results. Also when managers have partial commitment, plans fail miserably.

Weak communication spoils the strategic implementation  

Poor communications takes too many forms; misunderstanding, confusion, slip-ups and mistakes. Apparently, people at top like to develop strategic plans, and then hide them from subordinates and peer groups by giving half information or a gist of it. It’s so funny, but this is a fact.  People do this when there is no clarity; they fail to communicate the vision and strategic objectives to stakeholders. When new initiatives or objectives are outlined but not communicated throughout the organization, they fail at different level in different forms. Poor communication among team members is responsible for impediment in implementation. Expectations fail when opinions are not shared openly, thoroughly, and effectively. Also communication with the customers requires clarity; it is most important.

How Chevrolet Nova lost it in South America?

Have you heard the story about how General Motors made a simple but disastrous mistake when they tried to introduce the Nova in Latin America? They thought they could use the same brand name they used in the United States. They couldn’t figure out why no one wanted it until they learned it translated in Spanish to ‘No-go.’ When you are in Rome speak Roman.

Communication must consist of strategic objectives

Every action supporting the strategic objectives needs to be included in an overall communication plan so that the strategy is strengthened while an overall communication plan runs parallel. The communication gaps suck the originality of a strategy. Organizations become introverted in their communication strategies, whether the group is a large company or a small team. Communication is much more than words and flowcharts, it is also delivered through demonstration. When the management team does not follow the strategy themselves, they cannot expect the subordinates to follow it. Actions speak louder than words.

Founded in 1931, Swissair exemplified international transportation until the late 1990s, when the airline’s board decided to follow an aggressive borrowing and acquisition policy called the Hunter strategy. Then, the terrorist attacks of September 11, 2001 created a void in the company’s plans Swissair found itself cramped with debt. Swissair couldn’t handle the financial hit. Mismanagement and bad ideas created large sums of cash to purchase fuel at foreign airports which left the airline gasping for oxygen. In 2002, Switzerland was embarrassed to lose its national icon.

Lack of commitment

Business owners, CEOs, Directors and Executives must be fully committed and fully understand how a strategic plan can improve their enterprise. Without this knowledge, it’s tough to stay committed to the process. Each strategic implementation must have the right people involved. Those charged with executing the plan should be involved from the onset. Those involved in creating the plan will be committed to seeing it through execution. Writing the plan and putting it in the file is a bad idea. This is as bad as not writing a plan at all. If a plan is to be an effective management tool, it must be used and reviewed continually. Unwillingness or inability to change mars a well-defined strategy. The organization and its strategic plan need to be agile and able to adapt as market conditions change.

Polaroid was one of America’s early high-tech success stories. Founded in 1937 by scientist Edwin Land, the company built its initial business during the interwar period, prospered as a defense contractor during World War II, and then found new success as an innovator in the post-war boom years.  The executives at Polaroid were snapping and shaking their pictures into oblivion. So loved was the brand that countless people took daily shots of and created art, diaries and literature using these magical snapshots taped to their walls or to the street. Polaroid failed to adapt to changing technology trends. It didn’t anticipate digital revolution in photography and it never got ready for change. To top it, poor marketing management and their inability to distance themselves from instant camera roots caused them a big failure. The leader of an amazing niche technology till 1980, went bankrupt in 2005. The name may emerge again, but the brand and the impact will remain retro.

Wrong people to implement strategy

When wrong people occupy the leadership positions however good a plan is on paper, it gets diluted. Gathering marketplace reality, facts, and assumptions requires maturity. And, when job profiles are not in place, when they are not properly drawn and when people are not held accountable for the results plan perish automatically. Unrealistic goals or lack of focus and resources do support the strategy. Strategic plans must be focused and include a manageable number of goals, objectives, and programs. Fewer and focused is better than numerous and vague. Each strategy work on time frame, and each strategy requires definite goals and objectives.

Enron Lesson

Enron was a leader in energy sector. It started to dabble in e-commerce and exotic investment areas, such as weather futures. In 2001, Enron which was once valued at $90 billion and the 7th largest company in the United States, went bankrupt. It took jobs, investor savings, retiree futures and even some lives with it. In following years, it emerged that they shredded documents, started partnerships with their own shell companies, and engaged in massive inside trading. Enron is now synonymous with the business outcomes of galloping greed. Wrong people lack ethics and loss of ethical values only harm organizations.

Loss of momentum: Having the right balance is crucial to making sure that people stay focused on processes and objectives made for strategies, it helps business to grow. There are many distractions which need immediate attention. Those distractions split the focus and slow the momentum. Successful managers and entrepreneurs are not perfect people, but even when they lose focus, they know how to gather momentum. They are aware of realities and weaknesses of the business. They consistently audit their time and their plan to make sure they maintain, or regain, balance. Inconsistency is part of parcel of business, but gaining back the momentum is art of managers.

Firestone’s long-standing success gave the company a strong, unified sense of its strategies and values, its relationships with customers and employees, and its operating and investment processes. The company had, in short, a clear formula for success, which had served it well since the turn of the century. Then, almost overnight, everything changed. A French company, Michelin, introduced the radial tire to the U.S. market. Based on a breakthrough in design, radials were safer, longer-lasting, and more economical than traditional bias tires. They had already come to dominate European markets, and when Ford declared in 1972 that all its new cars would have radials, it was clear that they would dominate the U.S. market, too.

Firestone Tire & Rubber Company through its large operations in Europe, had witnessed firsthand the European markets’ quick embrace of radial tires during the 1960s. And it had developed forecasts that clearly indicated that radials would be rapidly accepted by U.S. automakers and consumers as well. Firestone saw radials coming, and it swiftly took action. It invested nearly $400 million more than $1 billion in today’s dollars in radial production, building a new plant dedicated to radial tires and converting several existing factories. Although Firestone’s response was quick, it was far from effective. Even as it invested in the new product, it clung to its old ways of working. Rather than redesign its production processes, it just tinkered with them even though the manufacture of radial tires required much higher quality standards. In addition, the company delayed closing many of its factories that produced bias tires, despite clear indications of their impending obsolescence. Active inertia had taken hold. Lack of momentum costs organizations heavy losses.

Lack of alignment

Alignment means that everyone in the organization clearly understand how their own set of goals and tasks are contributing to the strategic plan. Measuring alignment can be difficult when organizations use manual strategy and goal tools such as Excel or even pen and paper. Organizations need to formulate and calculate the level of alignment by measuring the amount of work-effort people need to put in against each goal set by it. One way to help drive alignment, is to create a clear strategic framework and make people categorize their activities into that framework.

KFC Coupon Riots

KFC worked closely with Oprah Winfrey to promote a new line of chicken. When Oprah offered free coupons on her website, KFC didn’t properly estimate the overwhelming response the ‘Oprah Effect’ would create. Customers were understandably angry when they didn’t get their free chicken, and KFC had to reimburse them with rain checks. This laid KFC lose its big chunk of market share.

In 1980 Michael Porter described three generic strategies which a company of any size (small, medium or big) can choose to pursue its competitive advantage. The three generic strategies are lower cost, differentiated or focus. A company can choose one of two types of competitive advantage; either lower costs than its competitors or differentiating itself along dimensions valued by customers to command a higher price. A company also chooses one of two types of scope, either focus by offering its products to selected segments of the market or mass market, offering its product across many market segments. The generic strategy reflects the organization’s strategic power.

Competitive advantage is a distinguishing trait of the business which may include access to natural resources,  firm’s location, supple supply chain, marketing channels, highly skilled personnel, geographic location, high entry barriers, etc. It can also be technological superiority, brand power which can provide competitive advantage, whether as a part of the product itself, as an advantage to the making of the product, or as a competitive aid in the business process.

Porter suggested that a company must choose one of the three strategies at a time; if it makes a wrong decision it may risk losing its precious resources. He says that to accomplish competitive advantage the firm must have the abilities to cope with the five forces in the market; competition between existing players, bargaining power of buyers, bargaining power of suppliers, threat of new entrants and threat of substitution.

Cost Leadership Strategy:

Wal-Mart Stores Inc. has been successful using cost leadership strategy very well for over years. The store has been attracting buyers with low prices; the low prices are offered every day to attract customers. The products are offered at a cheaper rate than competitors consistently, not occasionally. Wal-Mart is able to carry on the gigantic business due to its large scale and efficient supply chain management. They source products from cheap domestic suppliers and from low-wage foreign markets. This allows the company to sell their items at low prices and they earn profits through thin margins gained from high volumes of business.

In cost leadership strategy companies charge a lower price but their volumes are larger. Therefore, volume of business allows a company to maintain its profits and expand its market share. Some consumers shop only at stores that offer the lowest price, which means industries like groceries, fast foods and garments often have price wars. The winner in a price war enjoys protection from rivals because competitors lose out on their profits when they attempt to offer the lowest price. The cost leadership strategy also makes it difficult for new companies to enter the market because of thin profit margins.

Another brilliant example of cost leadership is the Swedish furniture retailer Ikea. This company offers furniture at amazing low price. It’s the best example of innovativeness. Ikea is able to keep its prices low because it sources its products from low-wage countries. It saves on labour cost and it does not assemble or deliver furniture; customers must collect the furniture from  the warehouse and assemble at home themselves. Thought from convenience point of view this is less suitable, customers still buy it from Ikea because of the lowest price tags.

Product Differentiation strategy:

Porter says that an industry has multiple segments that can be targeted by a firm. The breadth of its targeting refers to the aggressive capacity of the business. If a company targets customers in most or all segments based on characteristic or trait (size, shape, uniqueness, service etc) other than price it is opting for product differentiation strategy.

Etsy is an online artisan store and shopping gallery which has used differentiation strategy wisely. Etsy offers its users a platform to showcase their handmade wares and sell them to customers around the world. Hence this store is called as a crafter’s paradise. Etsy has carved a niche for itself through sales of craft supplies as well as homemade items. Through Etsy, the community of crafters has found a home on the internet and the world has been opened to the amateur artisan/crafter those who wish to sell their products. The Etsy business model brings together the artists and the business savvy of investors who are keen to support the ideas and talent of craftsmen. This business model has worked wonders for Etsy.

Differentiation is a marketing term used to describe the process of developing promotional messages that distinguish products from those offered by competitors. The differentiation plank is created in the minds of target customers. Effective differentiation is critical to building a strong business model. Samsung has adopted differentiation strategy by providing its customers large numbers of service centers network, online technical support, entertaining online complaints, live chats with customers and phone support. Each year Samsung invests minimum 9% of its sales revenue in R&D activity. It believes in innovative concepts and innovative marketing strategies. It has mapped out a plan of reaching $ 400 billion revenue and becoming the leader globally in appliances market by 2020.

Differentiation strategy involves making the products or services diverse yet attractive than competitors. How a company does this depends on the nature of the industry. Differentiation involves product features, functionality, durability, support, service quality, time and also brand image which the customers value. To make a success of a Differentiation strategy, organizations need good research and development, innovation and the ability to deliver high-quality product or service. It also requires effective sales and marketing team, so that the market understands the benefits offered by the differentiated offerings.

Large organizations pursuing differentiation strategy need to stay supple with their new product development processes. Otherwise, they risk attack on several fronts by competitors pursuing differentiation strategies in different market segments.

The Customer Focus Strategy (Niche marketing):

Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, by developing uniquely low-cost or well-specified products for the market. By doing so, the company also enjoys deep economies of scale. The company enjoys effective insights because of the smaller size of market. Thus, automatically the company enjoys market power within the niche. The only challenge in using customer focus strategy or niche market strategy is choosing markets where the customers are lesser prices sensitive.

Because of choosing the right markets and serving customers uniquely well, companies enjoy strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors.

In the focus strategy, it is still essential to decide whether a company would like to pursue Cost Leadership or Product Differentiation. Focus is not normally enough on its own. But whether the company uses Cost Focus or Differentiation Focus, the key to making a success of a generic focus strategy is to ensure that it offers its customers that ‘something extra’ as a result of serving only that market niche. The “something extra” that the organizations adds can contribute to reducing costs or to increasing differentiation.

As with its suppliers, the organization does not enjoy the bargaining power because of the lower volumes. But, because of practically no other substitutes to compete with, the company can pass on benefits to its customers.

Examples of niche markets are organic foods which are more expensive, but with promise of better quality and enhanced for environment protection. Another example of a niche is of traditional 35mm film cameras and films; these have become rare. The producers no longer enjoy the same economies of scale, but some consumers still like to use it. The internet has amplified the potential for niche markets and niche businesses. Because of it, the startup cost has been reduced and made it easier to reach a small number of niche customers.

The best example I would quote here is of Café Coffee Day in India. This chain of coffee restaurants brought in the concept of cafes to India where the young and the old can sit for a while, chat, discuss, and meet over a steaming cup of coffee. The first one opened in 1996 on Brigade Road in Bangalore. At CCD, people can have leisure meetings. Nobody disturbs or asks you to vacate the table. The concept instantaneously became a hit. It has a target audience of educated, serious people in big cities and metros where meeting places are in shortage.  Another appreciation CCD has capped is that there are also 11,000 small growers in India from whom they source coffee from.

Porter’s advise on choosing the right strategy: Porter says that organizations must spend time and efforts before they make choice of which generic strategy to pursue because it underpins every other strategic decision. He cautions organizations to use not more than one strategy. One of the most important reasons why companies must use only one of the three strategies is because the entire planned feeling revolves around it. Cost Leadership requires a very detailed internal focus on processes. Differentiation, on the other hand, demands an outward-facing, highly creative approach. So, when companies need to choose one out of three strategies they need to take into account their SWOT analysis. Also organizations need to do the five force analysis of the industry. After doing so the following questions need to be answered:

• Whether supplier’s bargaining power can be reduced or managed.
• Whether customer’s bargaining power can be reduced or managed.
• How to face rivalry among the existing players.
• Whether substitution threat can be reduced or managed.
• Whether threat of new entrants can be managed.

Thus, companies must select the generic strategy that gives them the strongest set of options because it is the starting point of strategic decisions making.