Porter's Generic Strategies

Question 1

What does Porter’s generic strategies theory focus on?

Answer 1

Cost vs Differentiation

Question 2

What does the theory basically say that businesses need to do?

Answer 2

Need to differentiate and be as cheap as possible

Question 3

What do businesses need to have access to have lower costs?
List 3 things

Answer 3

Lean production strategies
Cheaper labour
High productivity

Question 4

What product is it appropriate if businesses compete on price?

Answer 4

Generic products

Question 5

List 3 ways that businesses can differentiate?

Answer 5

Branding
Quality
Marketing

Question 6

Name a example of a business that has differentiation and low costs

Answer 6

Ikea

Question 7

How does Ikea achieve low costs via cost leadership?

Answer 7

Furniture flat packed
Out of town spreads fixed costs

Question 8

How does Ikea differentiate?

Answer 8

Unusual design
Localisation of product range

Question 9

If a business is in a broad market and focus on costs, what strategy are they doing?

Answer 9

Cost leadership strategy

Question 10

If a business is in a broad market and focus on differentiation, what strategy are they doing?

Answer 10

Differentiation leadership strategy

Question 11

If a business is in a narrow market and focus on cost, what strategy are they doing?

Answer 11

Cost Focus strategy

Question 12

If a business is in a narrow market and focus on differentiation, what strategy are they doing?

Answer 12

Differentiation Focus strategy

Question 13

What does focus mean?

Answer 13

Businesses that focus on the needs of their niche market

Question 14

What are 2 examples of businesses that have a focus?

Answer 14

Rolex
Poundland

Question 15

What does cost advantage mean according to Porter?

Answer 15

A business can get a competitive advantage by selling a similar product a Lower cost than its rivals.

Question 16

What does differentiation advantage mean according to Porter?

Answer 16

Selling better products at the same or a slightly higher price

Question 17

Why is having a competitive advantage good for a business?

Answer 17

Profit

Question 18

What can a competitive advantage build for a business?

Answer 18

Brand loyalty

Question 19

How can businesses hold on to its competitive advantage?

Answer 19

Monitor both internal and external factors in order to keep their advantage

Question 20

What does cost leadership strategy mean?

Answer 20

Lowest cost of production for a given level of quality

Question 21

What does differentiation strategy require?

Answer 21

A product with unique attributes which consumers value

Question 22

What kind of businesses can benefit from differentiation?

Answer 22

Innovative businesses

Question 23

What does a focus strategy concentrate on?

Answer 23

Niche market segments to achieve either cost advantage or differentiation

Question 24

What does Porter’s strategic theory help a business choose?

Answer 24

Choose its positioning strategy based on its competitive advantage and market scope.