Business Planning and strategy(Porter generic strategy) 0.0 / 5 ? Business StudiesBusiness PlansA2/A-levelCCEA Created by: Football03Created on: 23-03-22 18:59 What does the porter model suggest? 4 'generic' business strategies that could be adopted to try gain a competitive advantage 1 of 22 What did Porter believe you can achieve success or competitive advantage by? Differentiation or Cost 2 of 22 What are the 4 strategies involved in Porter's generic strategy? -Cost leadership -Cost focus -Differentiation leadership -Differentiation Focus 3 of 22 What is differentiation leadership and cost leadership(MASS)? These strategies seek competitive advantage in a broad range of market/industry segments 4 of 22 What is differentiation focus and cost focus (NICHE)? These strategies are adopted in a narrow market/industry 5 of 22 What is the objective of a cost leadership strategy? To become the lowest-cost producer in the industry, in a mass market 6 of 22 Why is cost leadership strategy good/important? -Benefit from economies of scale(pass discount onto customers) -Large profits -Use JIT/Lean production 7 of 22 What are 2 examples of businesses that show cost leadership? -Mc Donalds -Primark -Ryanair 8 of 22 When a business is using the cost leadership strategy, they will need to be the lowest-cost producer.How do they achieve this?(2 points) -`Lean production methods(JIT) -Use of bargaining power(management) to negotiate the lowest prices for production inputs 9 of 22 What is a 'suitable market'? A market which sells a standard product with little differentiation and their branding is seen as unimportant 10 of 22 What is the cost focus strategy? A lower-cost advantage in a niche market -Product will be 'standardised' -'Me -too's' 11 of 22 2 Examples of companies that use the cost focus strategy? -Ikea -Rolls royce 12 of 22 What is differentiation focus strategy aim?(NICHE) A business aims to differentiate within just one/a small number of target market segments 13 of 22 What does a business using the differentiation focus strategy need to ensure of? That customers really do have different needs and wants -Opportunities to provide customers with products clearly different from competitors 14 of 22 How do small businesses establish themselves in a niche marketing strategy? Premium pricing(finding ways to 'add value' for customers) e.g good customer service/returns 15 of 22 What are 2 example businesses that use differentiation focus strategy? -Gucci -Tesla 16 of 22 What is differentiation leadership?(MASS) Business targets much larger markets and aims to achieve competitive advantage through differentiation across the whole industry 17 of 22 What occurs within the differentiation leadership strategy? Charging premium pricing (reflects the 'added value' & higher quality) 18 of 22 What 3 ways could a business 'differentiate' their product/service? -Superior product quality -Branding -Consistent promotional support (sponsors/advertising) 19 of 22 Nike and Mercedes are example businesses's which use differentiation leadership strategy.How do they achieve this ? -Benefit from economies of scale(high demand) -Loyal customers -Premium pricing 20 of 22 What are 2 criticisms of Porters generic strategy framework? -Price can sometimes be used to differentiate -Cost leadership does not sell products itself 21 of 22 What must a business consider before choosing a strategy ? Monitoring their business and avoid complacency.Require the business to always remain vigilant regarding the needs of customers. 22 of 22
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