Analysis of Overstock.com strategic choices at corporate level

Analysis of Overstock.com strategic choices at corporate level

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Analyze Overstock.coms strategic choices at the corporate level, to include how these strategies follow Porter’s generic strategies. Are they in sync?
Which of the four quadrants of the ‘Grand Strategy Selection Matrix does Overstock.com fit in, and why?

SAMPLE ANSWER

Introduction

O.co is the popular initials of Overstock com Inc, the American Company that operates online businesses that are based in and also outside the US. Its head office is located in Cottonwood heights, Utah near the Salt Lake City.

Michael Porter’s (1996) generic strategies eventually narrow to the two major headings between the cost advantage and the product differentiation strategies.  Overstock Company applies the cost advantage in its corporate strategy level to market its products on its online business segment whose cost leadership advantage has earned its differentiated status as a cost efficient and effective products distributor as it strives to be the most economical or the lowest cost provider in the entire business to most customer segments. It was initially known as the D2- Discounts Direct before it rebranded itself to Overstock.Com. It sells all types of domestic equipments, appliances, furniture, jewelry, computers, magazines, DVDs, apparels among other requirements. It offers various discounts on brand names and also non branded products. Overstock operates a large online retailer that primarily supplies the American market with literally anything they would like to purchase including vehicles. It also operates a World stock Fair Trade shows that offers its clients a variety of handcrafted products. The characteristics of Overstock are in sync with porter’s arguments.

Overstock Company has the characteristics displayed in Quadrant 1 below where strong and very competitive companies flourish in markets that are rapidly growing. Overstock strategic position in online sales places it in a strategic market where its products have a wide global market and its development strategy has an excellent opportunity. The company can expand and develop its market in all directions, horizontally, forward or even backwards. Being a company that sells multiple products, its marketing strategy is to offer products that attract more clients because of their discounts and low pricing policies which aid it to penetrate the market. (Porter, 1996)

Overstock sells its products mostly at the industry’s average prices or at times lower to increase its market share and it subsidizes its costs by applying the  economies of scale, outsourcing, process efficiencies and its experience on the curve effect. Its major aim is to achieve a low- cost distribution network that’s relatively economical than its rivals and it’s the main focus of the firm’s strategy. (Hayes, Pisano, Upton and Wheelwright, 2005)

Porter (1996) argues that by utilizing the value chain and the value system and also the linkages a company can improve its efficiency significantly while exploiting the sources of competitive efficiency and other value added strategies.

Reference

Hayes, Pisano, Upton and Wheelwright (2005) Pursuing the Competitive Edge; New York, Wiley and Sons, page 264.

Porter, M.E. (1996) What is Strategy? Harvard Business Review, Boston pp 61-78 Vol.74, No.6 November-December.

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