Porter’s Generic Strategies

• Who developed the concept of generic strategies?

  Michael Porter
• What is the main challenge for business leaders regarding strategy?

  Gaining competitive advantage over competitors
• What are the two broad approaches to successful strategy identified by Porter?

  Differentiation and low cost
• What does competitive advantage refer to?

  Sustainable advantage over the competition
• How can a business offer value that competitors cannot beat?

  By organizing operations to provide unique value
• What is the objective of a low-cost strategy?

  To become the lowest cost operator in the market
• What are economies of scale?

  Cost advantages as output increases
• Why is low cost a powerful source of advantage?

  It allows better profits per unit sold
• What types of products are suitable for a low-cost strategy?

  Products requiring little differentiation
• What is a key feature of successful low-cost businesses?

  Achieving high economies of scale
• How can a business achieve low costs besides economies of scale?

  By investing in automation and efficiency
• What is a characteristic of effective low-cost operators?

  Having a low-cost culture
• What is the essence of differentiation strategy?

  Creating a product that is distinct and valued
• How can a product be differentiated?

  Through superior quality and features
• What is a significant source of competitive advantage in branding?

  Building and sustaining brand loyalty
• What is the risk of being stuck in the middle?

  Facing competitors with lower costs or better differentiation
• Which company has struggled due to being stuck in the middle?

  McDonald's
• What is a hybrid strategy?

  Combining low cost with differentiation
• What are Porter's two key strategies for gaining competitive advantage?

  • Differentiation
  • Low cost
• What are the key features of low-cost operators?

  • Achieve economies of scale
  • Invest in automation
  • Maintain a low-cost culture
  • Eliminate waste and costs
• What are the sources of differentiation in products?

  • Superior quality and features
  • Distinctive branding
  • Ease of purchase
  • Wide availability across channels
• What are the consequences of being stuck in the middle?

  • Competitive disadvantage
  • Struggling against lower-cost competitors
  • Difficulty appealing to differentiated product customers