This question contains two parts; be sure to answer each. First, summarize Porter's four competitive strategies, giving examples of companies that use each of the strategies. Next, suppose you are CEO of PaperWhite, a company that produces reams of copy paper. Which strategy would you use, and why?
What will be an ideal response?
Porter identified two "wide" strategies (cost-leadership and differentiation) that deal with broad markets, and two "narrow" strategies (cost-focus and focused-differentiation) that target specific markets.
1. Cost-leadership focuses on keeping costs and prices low for a wide market; examples are Timex, Acer, Home Depot, and Bic.
2. Differentiation stresses offering unique and superior products and services to a wide market; examples include Ritz-Carlton, Lexus, and Coca-Cola.
3. Cost-focus emphasizes low costs and prices, but to a narrow market; examples include low-cost products sold at discount store and discount regional gas station chains, such as Terrible Herbst, Rotten Robbie, and Maverik chains in parts of the West.
4. Focused-differentiation stresses unique and superior products to a narrow market; examples include the Ford GT supercar, Norwegian Cruise Line's Norwegian Escape, Cartier, Turnbull & Asser, and niche books.
As the CEO of PaperWhite, you would most likely use the cost-leadership strategy, because paper is paper, and (almost) everyone needs it.
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