Porter’s Strategic Mix

Question 1

Broad target market

Answer 1

Cost leadership, differentiation

Question 2

Narrow target market

Answer 2

Cost focus, differentiation focus

Question 3

Porter’s Strategic Mix

Answer 3

3 generic business strategies that would get competitive advantage. These were:
• Cost leadership; making products at the lowest cost, may include outsourcing, lean management, standard no frills low cost products
• Differentiation
• Focus; the product or service will serve a very small specific niche, high costs are passed on to customers, no close substitutes (Divided into cost focus and differentiation focus)
• He also said that if a business failed to select one of these strategies “stuck in the middle”

Question 4

Cost leadership suitability

Answer 4

Useful in highly competitive markets where there are homogenous products

Question 5

Differentiation suitability

Answer 5

Useful strategy in highly technological markets where there are rapidly changing and evolving features of products and services
• Where customers needs are very diverse
• Where the competitors in the market are all following a similar differentiation strategy

Question 6

Limits of mix

Answer 6

Not as relevant in very dynamic markets

• May not be useful in a crisis situation • Over simplifies the market structure

Question 7

Limitations of Boston matrix

Answer 7

• High market share does not always lead to high profits. There are high costs also involved with high market share.
• Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability
• This approach is considered as to be too simplistic