UNIT 8

Question 1

What is porters generic strategy

Answer 1

This is about the strategic positioning of a business and how it is perceived by customers compared with similar businesses in a market

Question 2

What are the five strategies in porters generic model

Answer 2

Cost Leadership
Differentiation Leadership
Cost focus
Differentiation focus
Stuck in the middle

Question 3

What is meant by a cost leadership strategy according to porters generic model

Answer 3

Competitive Advantage: Lower Cost
Competitive Scope: Broad Target

The objective is to become the lowest cost producer in the market

Question 4

Give a contextualised example of a cost leadership strategy for porters generic model

Answer 4

Poundland

Question 5

What is meant by a differentiation leadership strategy according to porters generic model

Answer 5

Competitive Advantage: Differentiation
Competitive Scope: Broad target

The business targets much larger markets and aims to achieve competitive advantage through differentiating.

Question 6

What is meant by a cost focus strategy according to porters generic model

Answer 6

Competitive Advantage: Lower cost
Competitive Scope: Narrow target

The business seeks lower cost advantage in just one or a small number of market segments

Question 7

What is meant by a differentiation focus according to porters generic model

Answer 7

Competitive Advantage: Differentiation
Competitive Scope: Narrow target

A business aims to differentiate within one or a small number of target market segments

Question 8

What is meant by stuck in the middle according to porters generic model

Answer 8

Middle of the model

Can link to failure and struggle due to not picking a suitable strategy

Question 9

Give a contextualised example of a differentiation leadership strategy for porters generic model

Answer 9

Nike

Question 10

Give a contextualised example of a cost focus strategy for porters generic model

Answer 10

Local Discount Retailer

Question 11

Give a contextualised example of a differentiation focus strategy for porters generic model

Answer 11

Ferrari

Question 12

Give a contextualised example of stuck in the middle for porters generic model

Answer 12

WH Smith

Question 13

Advantages of a cost leadership strategy for porters generic model

Answer 13

High levels of productivity
Sell in high volumes
High capacity utilisation

Question 14

Advantages of a cost focus strategy for porters generic model

Answer 14

Fewer competitors offering lower price

Question 15

Advantages of a differentiation leadership strategy for porters generic model

Answer 15

High quality
Good brand image

Question 16

Advantages of a differentiation focus strategy for porters generic model

Answer 16

Charge premium price
USP
Differentiate

Question 17

Disadvantages of a cost leadership strategy for porters generic model

Answer 17

Low quality
Poor reputation
Low demand
Low profit margins

Question 18

Disadvantages of a differentiation leadership strategy for porters generic model

Answer 18

Long time to achieve
Lots of competitors

Question 19

Disadvantages of a cost focus strategy for porters generic model

Answer 19

Little target audience
Lack of expansion

Question 20

Disadvantages of a differentiation focus strategy for porters generic model

Answer 20

Costly to produce
Time consuming to establish

Question 21

What is Bowman’s Strategic Clock

Answer 21

Model looks at strategic positions demonstrating different combinations of value and price. Also identifies strategies which are competitive or not

Question 22

What does Bowman’s Strategic Clock look like

Answer 22

Question 23

What is meant by hybrid strategies in bowman’s strategic clock with example

Answer 23

Low price with high perceived added value

Reputation for fair prices and good quality

Aldi or Lidl

Question 24

What is meant by differentiation strategies in bowman’s strategic clock with example

Answer 24

Offers a product with a USP and moderately high price

Builds brand loyalty

If focused then that targets niche markets whereas differentiation is wide markets

Differentiation - British Airways
Focused - Rolls Royce

Question 25

What is meant by non-competitive strategies in bowman’s strategic clock with example

Answer 25

High pricing with low perceived added value

Could lead to high margins, monopoly and loss of market share

Tesco or Royal Mail

Question 26

What is meant by low price strategies in bowman’s strategic clock with example

Answer 26

Low cost
Operate in mass market
Profit margins are low
Compete in price wars

Travelodge