4H – Porter's Generic Strategies

Question 1

Porter’s lower cost strategy

Answer 1

involves a business offering customers similar or lower-priced products compared to the industry average, while remaining profitable by achieving the lowest cost of operations among competitors.

Question 2

Advantages (lower cost strategy)
Disadvantages (lower cost strategy)

Answer 2

Advantages:
- attractive to cost- conscious customers
- reduce the expenses of operations

Disadvantages:
- basic products may not meet the specific needs of customers
- lower price items may result in negative customer perception (bad quality)

Question 3

Porter’s differentiation strategy

Answer 3

involves offering customers unique services or product features that are of perceived value to customers, which can then be sold at a higher price than competitors.

Question 4

Advantages (differentiation strategy)
Disadvantages (differentiation strategy)

Answer 4

Advantages:
- Customers are often loyal to the business due to unique products
- Can charge premium prices for products (as customers cannot purchase anywhere else)
Disadvantages:
- difficult to prevent competitors from creating same/ similar products
- higher selling prices can deter cost conscious customers