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Porter's Generic Strategies 3-5

Strategy 3: Low-Cost Provider

Definition: Striving to achieve costs than rivals and appealing to a broad spectrum of customers, usually by under pricing rivals.

Strategy 4: Broad Differentiation
Definition: Seeking to differentiate the company's product offering from rivals' in ways that will appeal to a broad spectrum of buyers.

Strategy 5: Focused Low-Cost
Definition: Concentrating on a narrow buyer segment and outcompeting rivals by having lower costs than rivals and thus being able to serve niche members at a lower price.

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Low cost strategy
In low cost strategy, a company keeps the cost of products or services low and yet provides basic features that are considered essential by buyers. Examples of companies following low cost strategy are Wal-Mart, Southwest Airlines, and Tesco. These companies have successfully eliminated unnecessary costs and achieved economies of scale to enjoy high profits. Cost leadership is successful in a market where customers are price sensitive. To succeed in cost leadership, firms need to have strengths such as:
• Skills and expertise in manufacturing process engineering
• Efficient distribution channels
• Access to ...

Solution Summary

The document has details of 3 of the Porter's Generic Strategies - Low cost strategy, Broad Differentiation and Focused Low cost