3.8.2 Flashcards
What is competitive advantage in business?
Competitive advantage occurs when a business creates value for its customers that is greater than the costs of supplying the benefits and is superior to that of other businesses.
What are Porter’s Generic Strategies for achieving competitive advantage?
Porter’s Generic Strategies include:
* Cost leadership: Achieving lower costs than rivals through economies of scale, experience, or product/process design.
* Cost focus: Focusing on a narrow market segment to offer lower costs.
* Differentiation leadership: Offering more benefits than rivals, such as a unique selling proposition (USP).
* Differentiation focus: Offering differentiated products for a specific market segment.
What factors influence a business’s choice of positioning strategy?
The choice of positioning strategy is influenced by:
* Competitors’ positioning: Whether a business chooses to compete directly or avoid competition.
* External environment: Changes in market conditions, like customer demands for sustainability.
* Strengths and core competencies: A business must assess its own strengths and competitive advantages when choosing its position.
Why is strategic positioning important for a business?
Strategic positioning is important because it helps a business decide where it fits in the market relative to competitors. It also allows the business to respond to changing market conditions, ensuring the business is effectively competing.
What are the benefits of having a competitive advantage?
Benefits include:
* Justifying higher prices
* Increasing market share
* Increasing sales and profits
* Improving reputation
What are the difficulties of maintaining a competitive advantage?
Difficulties include:
* Sustainability: Whether the competitive advantage can be maintained over time.
* Costs: Developing and maintaining a competitive advantage can be expensive and resource-intensive.
