Application of Porter's Competitive Strategy

question 146

Multiple Choice

Application of Porter's Competitive Strategy
Stacie sighed. Her general manager had just left after giving her the latest assignment- readdress the competitive advantage of their company. By Friday's meeting, Stacie was to have developed three differing strategies the business could use in order to maintain its competitive advantage. Its computer business was slowly losing market share to its competitors, and everyone realized something needed to be done. Stacie glanced through the article by Michael Porter that her manager had left with her. According to Porter, there were three differing types of strategies they could choose from. Stacie began wondering if there was a way they could make their computers cheaper, which would allow them to then sell at a lower price. If they could reduce price by $100 a machine, they would be the industry leaders in price. Stacie wondered if they could find any lower- priced suppliers for the more expensive parts of their computers. She knew that their computers appealed particularly to small business owners due in part to price. They were able to offer the lower price because their computers were not as powerful or fast as some machines, but did contain the necessary word processing, database, and spreadsheet capabilities necessary for a typical small business owner. The lack of frills with the solid three program capabilities, plus their known reputation for quality had worked for them in the past. Stacie wondered if perhaps they needed to look at a smaller segment of the market, maybe small businesses with large accounts receivables that would fully utilize their specific database. She knew that would cut their market by 1/8 but maybe achieving a definite market niche would help. Stacie began compiling her report for Friday's meeting.
-The long- term success of any competitive strategy Stacie develops requires that the advantage be which of the following?

• A)dissimilar to the strategy used by the competition
• B)similar to the strategy used by the competition
• C)sustainable
• D)profitable

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Definitions:

Attribution Errors

Mistakes in attributing specific behaviors or outcomes to the wrong causes, often leading to misunderstandings or misjudgments about people's actions or intentions.

Halo Effect

A cognitive bias where an observer's overall impression of a person, company, brand, or product influences their feelings and thoughts about that entity's character or properties.

Permanent Change

An alteration in a system or environment that is enduring and not reversible.

Mental Models

Internal representations of the world that people use to understand and interact with their environment.