Business Strategy Design Patterns The Porter Patterns

1 Abstract This paper describes five widely-applicable business strategy patterns. The initiate patterns where inspired Michael Porter's work on competitive strategy (1980). By applying the pattern form we are able to explore the strategies and consequences in a fresh light. The patterns form part of a larger endeavour to apply pattern thinking to the business domain. This endeavour seeks to map the business domain in patterns, this involves develop patterns, possibly based on existing literature, and mapping existing patterns into a coherent model of the business domain. If you find the paper interesting you might be interested in some more patterns that are currently (May 2005) in development. These describe in more detail how these strategies can be implemented: This paper is one of the most downloaded pieces on my website. I'd be interested to know more about who is downloading the paper, what use your making of it and any comments you have on [email protected]. Cost Leadership Build an organization that can produce your chosen product more cheaply than anyone else. You can then choose to undercut the opposition (and sell more) or sell at the same price (and make more profit per unit.) Differentiated Product Build a product that fulfils the same functions as your competitors but is clearly different, e.g. it is better quality, novel design, or carries a brand name. Customer will be prepared to pay more for your product than the competition. Market Focus You can't compete directly on cost or differentiation with the market leader; so, focus on a niche in the market. The niche will be smaller than the overall market (so sales will be lower) but the customer requirements will be different, serve these customers requirements better then the mass market and they will buy from you again and again. Sweet Spot Customers don't always want the best or the cheapest, so, produce a product that combines elements of differentiation with reasonable cost so you offer superior value. However, be careful, customer tastes