Force field analysis & Porters generic strategy

Question 1

What is the low cost producer strategy?

Answer 1

is where a business is able to gain a competitive edge by becoming the low-cost producer in its industry.
eg- implementing technology

Question 2

Negatives of the low cost producer strategy

Answer 2

• Consumers may think products are lower quality.

- Lowing costs may reduce the quality of the product

Question 3

Positives of the low cost producer strategy

Answer 3

-Lower prices will attract consumers who are price conscious.

Question 4

What is the differentiation strategy?

Answer 4

Is where the business aims to be unique in its industry which is valued by the consumer.
Business can charge a premium price.

Question 5

How can a business be different?

Answer 5

• High quality materials
• Patents (customer can only receive product feature from that business)
• Marketing (Red bull)

Question 6

Negatives of the differentiation strategy

Answer 6

• Being unique will increase costs

- Some consumers may not be able to afford the premium price.

Question 7

What are the five competitive forces?

Answer 7

• Supplier power: increase costs
• Buyer power: decreasing prices
• Competitive rivalry
• Threat of substitution
• Threat of new rivalry

Question 8

What are the steps taken to decide what generic strategy a business can use?

Answer 8

1) Analyse the competitive forces
2) Determine businesses strengths
3) Compare strengths to competitve forces
4) Decide on the strategy.