Question

question 18

which of the following is true about porters competitive strategies:

• differentiation strategies address whether the market scope is broad or narrow.
• differentiation can be broken down into low cost or broad scope categories.
• an airline using the differentiation strategy would be likely to offer travelers refreshments at a reasonable price, rather than serve bounteous meals.
• apple, inc. is a company that has benefited from a differentiation strategy and never tried to compete on price because it likes being perceived as an \elite\ brand.

Explanation:

🆕 New Concept Discovered: Porter's Generic Competitive Strategies
How businesses choose to compete and gain advantage

Step 1: Understand Porter's Generic Strategies

Michael Porter's framework identifies four primary competitive strategies based on two dimensions: source of competitive advantage (low cost vs. differentiation) and competitive scope (broad target vs. narrow target).

• Cost Leadership: Aiming to be the lowest-cost producer in a broad market.
• Differentiation: Offering unique, premium products or services to a broad market.
• Focus (Cost or Differentiation): Targeting a narrow, niche market segment with either a low-cost or highly differentiated approach.

Step 2: Evaluate Option 1

"Differentiation strategies address whether the market scope is broad or narrow."

This is incorrect. Differentiation is a source of competitive advantage (making a product unique). The dimension that addresses whether the market is broad or narrow is competitive scope (which divides strategies into broad target vs. focused/narrow target).

Step 3: Evaluate Option 2

"Differentiation can be broken down into low cost or broad scope categories."

This is incorrect. Differentiation and low cost are mutually exclusive sources of competitive advantage in Porter's matrix. Differentiation is not broken down into low cost.

Step 4: Evaluate Option 3

"An airline using the differentiation strategy would be likely to offer travelers refreshments at a reasonable price, rather than serve bounteous meals."

This is incorrect. An airline focusing on a differentiation strategy competes by offering superior, unique, and premium services (such as bounteous, high-quality meals, luxury seating, and exceptional service) to justify a higher ticket price. Offering basic refreshments at a reasonable price to keep costs down is characteristic of a cost leadership strategy (like budget airlines).

Step 5: Evaluate Option 4

"Apple, Inc. is a company that has benefited from a differentiation strategy and never tried to compete on price because it likes being perceived as an "elite" brand."

This is the correct statement. Apple is a classic real-world example of a company utilizing a differentiation strategy. They focus on design, innovation, brand loyalty, and a premium ecosystem. Because of this unique value, they do not compete on price (they do not try to be the cheapest option) and instead maintain high profit margins by being perceived as a premium, "elite" brand.

Answer:

Apple, Inc. is a company that has benefited from a differentiation strategy and never tried to compete on price because it likes being perceived as an "elite" brand.