UNIT 8 Flashcards
What is porters generic strategy
This is about the strategic positioning of a business and how it is perceived by customers compared with similar businesses in a market
What are the five strategies in porters generic model
Cost Leadership
Differentiation Leadership
Cost focus
Differentiation focus
Stuck in the middle
What is meant by a cost leadership strategy according to porters generic model
Competitive Advantage: Lower Cost
Competitive Scope: Broad Target
The objective is to become the lowest cost producer in the market
Give a contextualised example of a cost leadership strategy for porters generic model
Poundland
What is meant by a differentiation leadership strategy according to porters generic model
Competitive Advantage: Differentiation
Competitive Scope: Broad target
The business targets much larger markets and aims to achieve competitive advantage through differentiating.
What is meant by a cost focus strategy according to porters generic model
Competitive Advantage: Lower cost
Competitive Scope: Narrow target
The business seeks lower cost advantage in just one or a small number of market segments
What is meant by a differentiation focus according to porters generic model
Competitive Advantage: Differentiation
Competitive Scope: Narrow target
A business aims to differentiate within one or a small number of target market segments
What is meant by stuck in the middle according to porters generic model
Middle of the model
Can link to failure and struggle due to not picking a suitable strategy
Give a contextualised example of a differentiation leadership strategy for porters generic model
Nike
Give a contextualised example of a cost focus strategy for porters generic model
Local Discount Retailer
Give a contextualised example of a differentiation focus strategy for porters generic model
Ferrari
Give a contextualised example of stuck in the middle for porters generic model
WH Smith
Advantages of a cost leadership strategy for porters generic model
High levels of productivity
Sell in high volumes
High capacity utilisation
Advantages of a cost focus strategy for porters generic model
Fewer competitors offering lower price
Advantages of a differentiation leadership strategy for porters generic model
High quality
Good brand image
Advantages of a differentiation focus strategy for porters generic model
Charge premium price
USP
Differentiate
Disadvantages of a cost leadership strategy for porters generic model
Low quality
Poor reputation
Low demand
Low profit margins
Disadvantages of a differentiation leadership strategy for porters generic model
Long time to achieve
Lots of competitors
Disadvantages of a cost focus strategy for porters generic model
Little target audience
Lack of expansion
Disadvantages of a differentiation focus strategy for porters generic model
Costly to produce
Time consuming to establish
What is Bowman’s Strategic Clock
Model looks at strategic positions demonstrating different combinations of value and price. Also identifies strategies which are competitive or not
What does Bowman’s Strategic Clock look like
What is meant by hybrid strategies in bowman’s strategic clock with example
Low price with high perceived added value
Reputation for fair prices and good quality
Aldi or Lidl
What is meant by differentiation strategies in bowman’s strategic clock with example
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
What is meant by non-competitive strategies in bowman’s strategic clock with example
High pricing with low perceived added value
Could lead to high margins, monopoly and loss of market share
Tesco or Royal Mail
What is meant by low price strategies in bowman’s strategic clock with example
Low cost
Operate in mass market
Profit margins are low
Compete in price wars
Travelodge
