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Question 1

Porter’s generic strategy

Answer 1

Are used to determine the best way to achieve a competitive advantage in a given market.

Question 2

Two strategies

Answer 2

Lower cost, differentiation

Question 3

Lower cost

Answer 3

A strategy where a business aims to become the low-cost producer in its industry.

Question 4

Differentiation

Answer 4

Where a business seeks to be unique in its industry in some way that is valued by consumers.

Question 5

Lower costs +

Answer 5

May broaden the market if the lower costs are passed onto customers through lower prices, potentially increasing market share

Are able to withstand price wars longer than competitors as the business has the lowest costs in the industry

Question 6

Similarities

Answer 6

both strategies outline how a business can gain a competitive advantage

both strategies aim to maintain or increase profit margins

Question 7

Differences

Answer 7

Lower costs can lead to lowering the price of the product whereas differentiation will often lead to premium prices

Lower cost can increase market share by attracting price-sensitive consumers who often lack brand loyalty whereas differentiation attracts customers that are often more brand loyal and willing to pay a premium price