BMT 10: Porter's Generic Strategies (HL ONLY)

axis

competitive advantage - cost uniqeness

scope - mass niche

5 labels

cost leadership

cost focus

differentiation focus

differentiation

stuck in middle

cost leadership

lowest cost supplier to increase profit margin

not price lower

types of cost leadership

cost leader with parity—same price as competitors but lower cost and higher profit margin

cost leader with proximity—lower price

differentiation

make good and service distinct from competitors

focus on quality

success charges premium price

intellectual property rights to protect

advantages of differentiation

customer loyalty

reduce price elasticity

disadvnatges of differentiation

expensive

need to contuinally be innovative to add value - time consuming

marketing investment high level

cost focus

low cost producer in niche market

differentiation focus

usp in niche market

advantage if focus

charge high price

lack competition

brand loyalty

disadvantages of focus

market size limited - cant diversify risk

stuck in middle

no sustainable competitive advnatge

advantages of Porter's generic strategies

straightforward framework to decide which market and option

choice and flexibility

guide for managers

disadvtanges of porter genetic strategies

theroetucal in nature - hard to achieve

suggets stuck in the middle; however, can focus on both quality and cost

no considertaions for external environment

Porter's generic strategies

decision-making tool that outlines the ways

that any business can use to gain a competitive advantage.