Porter's Strategic Matrix

Question 1

What is Porter’s Strategic Matrix?

Answer 1

• Finding a way to achieve a sustainable competitive advantage over other competitors in the market

Question 2

Which 2 strategies did Porter suggest?

Answer 2

• Differentiation
• Low price

Question 3

What does the Low-Cost strategy suggest?

Answer 3

• About becoming the lowest-cost operator
• Involves production on a large scale
• Enables the business to exploit economies of scale

Question 4

How is Low-Cost a source of competitive advantage?

Answer 4

• If SP’s are broadly similar, the lowest-cost operator will enjoy the highest profit
• Lowest-Cost operator can also offer the lowest price

Question 5

What are the likely features of Low-Cost operators?

Answer 5

• High levels of productivity + efficiency
• High capacity utilisation
• Large-scale economies
• Lean production
• Access to widest and most important distribution channels

Question 6

What does the Differentiation strategy suggest?

Answer 6

• Aims to offer a product that is distinctively different from the competition, with the customer valuing that differentiation

Question 7

How can Differentiation be offered?

Answer 7

• Superior product quality
• Branding
• Wide distribution
• Sustained promotion