porters generic strategies

• porter's generic strategies

  helps business choose positioning strategy based on its competitive advantage and market scope
• types of competitive advantage

  *low cost

  *differentiation
• porter's theory

  position of business relative to competitors within its industry determines whether its profitability is above/below average industry average - ability of business to earn above average profits depends on whether it has sustainable competitive advantage
• cost leadership

  *aiming to become low cost provider in the industry

  *may use economies of scale

  *patented technology makes processes more efficient

  *if business can achieve and sustain overall cost leadership, it'll achieve above average profits if it can charge similar prices to its rivals
• differentiation

  *business seeks to be unique in its industry

  *it chooses one or more benefits that buyers value and seeks to meet these better than competitors - charges premium price
• focus (cost & differentiation)


  *concentrates on one segment within the market - target market may be different from rest of market because buyers have unusual needs