porters generic strategic

Question 1

porters generic strategy

Answer 1

Michael porters created a strategic management theory which describes how a business can gain competitive over its industry in hopes to dominate or increase market share. the business focuses on one of two generic strategies too gain this advantage, lower cost or differentiation

Question 2

lower-cost strategy

Answer 2

businesses may choose to gain a competitive advantage by aiming to be the low-cost producer in its industry. businesses can achieve this in a number of ways, examples include achieving economies of scale, implementing technology, preferential access to raw materials. businesses can gain a competitive advantage in two main ways, selling the good/service at or near industry average, increasing profit margins of business or reducing the price to become more attractive to the price-sensitive consumer

Question 3

strength and weaknesses of the lower-cost strategy

Answer 3

strengths: strong with price-conscious consumers
weaknesses: potentially lower customer loyalty as a customer are only price-sensitive
lower price/ lower quality
will not meet all the demands of the customer.
is not “different”

Question 4

differentiation strategy

Answer 4

aim to be more innovative and creative than there rivals and create goods or services that have a unique point of difference too competitors. allows premium prices to be charged as it is customer attractive.
a business can be different through patents, high-quality material, marketing relationships, innovations, and training.

Question 5

strengths and weaknesses of differentiation strategy

Answer 5

strengths:
strong competitive advantage results in brand loyalty.
can charge premium price
brand image created in big brands through money
successful in small brands who create a small point of difference.
weaknesses:
not good for price-sensitive markets
the unique features can be copied by other producers as it is hard to protect intellectual property

Question 6

5 competitive forces

Answer 6

supplier power: how easy it is for suppliers to drive costs up
buyer power: how powerful buyers are in driving prices down
competitive rivalry: looks at the number and capability of competitors
threat of substitution: how easy it is for customers to find a similar goods or service.
threat of new entry: how easy it is for new competitors to enter the market