IE unit 1.3 competition Flashcards
What is the first step in constructing a competitive advantage?
Understand the benefit(s) your product or service provides. It must offer real value and generate interest.
Why is knowing the target market important for constructing a competitive advantage?
A company must know who is purchasing from them and how to cater to the specific needs of its target market.
Why must a company understand its competitors when constructing a competitive advantage?
To assess the competitive landscape and find ways to offer benefits that other competitors cannot match.
What is the objective of a cost leadership strategy?
The objective is to become the lowest-cost producer, often through large-scale production and exploiting economies of scale
How does a cost leadership strategy provide a competitive advantage?
By producing products at a lower cost than competitors, allowing the company to set a price that competitors cannot replicate, leading to profits.
What is the goal of a differentiation strategy?
To offer products or services that are distinct from competitors, often through high-quality or innovative offerings.
How does a differentiation strategy lead to a competitive advantage?
It allows the company to set a premium price for its products or services due to their uniqueness
What is a focus strategy?
A strategy where a company focuses on a narrow market segment and tailors its products or services to meet the specific needs of that segment
What are the two variants of the focus strategy?
Cost-focus (lowest-cost producer in a narrow market segment) and Differentiation-focus (differentiated products/services in a narrow market segment).
