Porter’s Strategic Matrix Flashcards
1
Q
What is competitive advantage?
A
An advantage over competitors gained by offering consumers greater value
2
Q
What is the low cost strategy?
A
It’s an objective to become the lowest-cost operator, involving production on a large scale to achieve economies of scale.
3
Q
Positives of low cost strategy?
A
+ lowest costs = highest profits
+ offer lowest prices
+ gain economies of scale
↳ All leading to competitive advantage
4
Q
Features of low cost operators
A
High levels of productivity
High capacity utilisation
Large scale
Increased bargaining power —> lower prices
5
Q
Negatives of low cost strategy
A
- lower pay
- poor working conditions
- reduce motivation
- decrease quality/ reputation
- decrease levels of innovation
6
Q
Positives of differentiation
A
+ Superior product quality
+ Improved branding
+ Sustained promotion/advertising
+ Wider distribution
+ Charge higher prices
7
Q
Negatives of differentiation
A
- Costly —> materials, training, advertising
- R&D is time consuming
- Smaller pool of customers
