Question

True or False: Victoria's Secret, with its low-priced holiday discounts, exemplifies a firm pursuing cost-leadership; while Wal-Mart, with its vast mix of products, exemplifies a firm pursuing a differentiation strategy. True False

Answer 1

Answer:

False.

Explanation:

The Victoria's part is true she is pursuing cost leadership by keeping it's price low although the Walmart's example is not related to differentiation strategy of competitive advantage. Because keeping mix of products is not differentiation, it's not unique.

• Porter suggested 4 strategies and he believed that by using one of these strategies companies can gain competitive advantage.

The 4 strategies for competitive advantage:

1. Cost Focus.
2. Cost leadership.
3. Differentiation Focus.
4. Differentiation Leadership.

Answer 2

Answer:

The statement is: False.

Explanation:

Cost leadership refers to the efforts companies make to create a comparative advantage, meaning to differentiate from competitors bu using opportunity costs that allow the production costs to be lower. Producers' discounts are not a comparative advantage unless the production of the goods offered were lower than competitors. Thus, Victoria's Secret campaign for low-priced holiday discounts is not an example of cost leadership.

The differentiation strategy is related to the differential advantage companies develop the whole offering a product that has a unique feature making it outstanding from its competitors. Most firms implementing this approach focus on the production of one product only to offer customers a specialized good. So, if Wal-Mart provides a mix of products, the store is not implementing a differentiation strategy.