Page 70 - BA1 Integrated Workbook STUDENT 2018

Chapter 7

Porter’s Generic strategies

Porter suggested that there are three ways to gain competitive advantage:

Competitive stance

Cost
Strategic scope
Broad leadership Differentiation

Focus

Narrow

2.1 Cost leadership

 Based on becoming the lowest cost producer of standard products or
services (not necessarily inferior ones).

 Cost advantage comes from economies of scale, large production runs,
automation and efficiency (links to the Value Chain).

 Will allow the business to either undercut rivals prices, or match their prices
while earning more profit for reinvestment.

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