5. Fill in the table on the following page to distinguish among the five generic

Question

5. Fill in the table on the following page to distinguish among the five generic strategies. Two of the five entries have been included for you as examples.

The five generic strategies

1

2

3

4

5

Low-Cost Provider

Focused Differentiation

Strategic Target

A broad cross-section of the market

A narrow well-defined group of buyers with unique preferences and needs

Basis of Competitive Advantage

Maintain lower overall costs than competitors

Ability to stand apart from rivals by developing features that appeal to the unique tastes and requirements of market niche members

How does it work?

Find cost savings in every part of the value chain while maintaining acceptable levels of quality

Improve capabilities to provide custom-made products through smaller-scale, flexible operations

1

2

3

4

5

Low-Cost Provider

Focused Differentiation

Strategic Target

A broad cross-section of the market

A narrow well-defined group of buyers with unique preferences and needs

Basis of Competitive Advantage

Maintain lower overall costs than competitors

Ability to stand apart from rivals by developing features that appeal to the unique tastes and requirements of market niche members

How does it work?

Find cost savings in every part of the value chain while maintaining acceptable levels of quality

Improve capabilities to provide custom-made products through smaller-scale, flexible operations

Explanation / Answer

Below is the table for five generic strategies -

2 3 5 Broad Differentiation Focused low cost Best-cost provider Strategic Target A broad cross-section of the market A narrow well-defined group of buyers who are price-sensitive Broad consumer market Basis of competitive advantage Ability to stand apart from rivals by developing features that are unque to the product and covering broad range of consumer preferences Ability to offer lower costs for a narrow group of buyers thus beating the rivals in attracting the focused group of buyers Ability to offer lower costs and better differentiation of products for broader market to beat the rivals How does it work? Improve capabilities to provide differential features through large-scale operations by innovating across the value chain Reduce costs to the specifc set of products by focusing on eliminating non-value added activities thus resulting in cost savings Reduce costs while maintaining some differentiation in the products through innovating the processes.

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