One of the big pitfalls in crafting a competitive strategy is that managers, who are torn about the pros and cons of the various generic strategies, will opt for "stuck-in-the-middle" strategies that represent compromises between lower costs and greater differentiation, and between broad and narrow market appeal. True or false? Explain your answer.

Question

What will be an ideal response?

Answer 1

True. A company's biggest vulnerability in employing a best-cost provider strategy is not having the requisite core competencies and efficiencies in managing value chain activities to support the addition of differentiating features without significantly increasing costs. A company with a modest degree of differentiation and no real cost advantage will most likely find itself squeezed (or trapped in the middle) between the firms using low-cost strategies and those using differentiation strategies. Thus, a successful best-cost provider must offer buyers significantly better product attributes to justify a price above what low-cost leaders are charging. Likewise, it has to achieve significantly lower costs in providing upscale features so that it can outcompete high-end differentiators on the basis of a significantly lower price.