What are Overstock.Com’s Strategic Choices at the Corporate Level?
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?
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-
Overstock Com’s Strategic Choices at the Corporate Level 2
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)
Weak Competitive Strong Competitive
1. Companies in Rapid Companies In
- markets
growth Market with Rapid Growth
1 Market Dev Market Dev
2 Market Penetration Market Penetration
3 Product Dev Product Dev
4 Horizontal Integration Horizontal Integration
5 Divestiture Liquidation Related diversification
6 Forward integration
Weak Competitive Strong Competitive
3. Companies In markets 4. Companies In Mkt
that have slow Growth with Slow Growth
1 Retrenchment Joint venture
2 Related Diversification Related Diversification
Overstock Com’s Strategic Choices at the Corporate Level 3
3 Unrelated diversification Unrelated
diversification
4 Liquidation
5 Divestiture Liquidation
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
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