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Differentiation, Cost Leadership, or Ending Up in the Middle? A Reflection on the Viability of Porter’s Generic Strategies through a Case Study Comparison of McDonalds and Starbucks

Author

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  • Mehvish Bha
  • Ankur Agrawal
  • Michail V. Barmpas

Abstract

Why most businesses cannot retain any would-be competitive advantage even if they are the chief actors in a market or markets that it is them that have made profitable? Should we contemplate a current competitive advantage as a formula for uninterrupted success, or all is a misconception of a dominant paradigm that has locked the corporation to the profitable bygone days not letting them to look at the future and accordingly leaving behind profit prospects? The purpose of this study is to challenge the myth of sustainable competitive advantage presumably obtained through Porter’s Generic Strategies framework by examining what really occurs in the fast-food market at present. This is done through an assessment of the Cost Leadership and Differentiation strategies seemingly applied in McDonalds and Starbucks respectively in relation to planning, accumulation and use of resources, and the generation of core competences (or internal dynamics), if any. And, to seek if it is possible, or not, to tie sustainability of any long-term earnings with these firms’ best usage of in-house competencies as well as their skill to anticipate key environmental blows (or external dynamics). The writers adopt an interrogative attitude to the classical strategic management theory and, based on the results of the study, they go on to maintain the opinion that there is not such a thing as an advantage that is for ever viable. At the end of the study, the authors, again based on the results, suggest ways to increase the possibility of sustaining any strategic advantage for the specific firms. It is expected that these reflections will encourage more research in the area.

Suggested Citation

  • Mehvish Bha & Ankur Agrawal & Michail V. Barmpas, 2024. "Differentiation, Cost Leadership, or Ending Up in the Middle? A Reflection on the Viability of Porter’s Generic Strategies through a Case Study Comparison of McDonalds and Starbucks," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 10(3), pages 217-238, July.
    • Handle: RePEc:ate:journl:ajbev10i3-3
    DOI: 10.30958/ajbe.10-3-3
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    References listed on IDEAS

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    1. Brad MacKay & Peter McKiernan, 2006. "Back to the Future: History and the Diagnosis of Environmental Context," International Studies of Management & Organization, Taylor & Francis Journals, vol. 36(3), pages 93-109, January.
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