Angela Carolina Bustamante Gonzalez

DP1
Business management
Miss Christina Appiah-Nimo

Porter's Generic strategy

- Define Porter’s generic strategies. [2 marks]

Porter's generic strategies are a set of strategic options that companies can use to achieve a
competitive advantage in their respective markets. These are four strategies
Cost leadership: the strategy of becoming the lowest cost supplier compared to its competitors.
It can be with economics of scale by having a lower price.

Differentiation : the strategy of making your service or product distinctive and unique from your
competitors either with a unique brand, quality or excellent in-purchase and post-purchase
service.

Focus : the strategy of having a specific audience to supply and having a market preference.

- In the context of Lidl, outline the meaning of a competitive advantage. [2 marks]

For Lidl the competitive advantage refers to them as a company providing they stand out from
their competitors with quality products under their own brand name, quality sales, quality
service, a wide variety of products and good quality customer service.

- Explain two advantages and one disadvantage of a cost leadership strategy for Lidl. [6
marks]

Lidl's focus on reducing costs in the areas of its business gives it a better place to focus on
reinvesting in its business, expanding and improving its operations.

Lidl has a large majority of products made by them which gives them a great advantage when it
comes to customer preference for their product and better revenues from in-house production.
Lidl may find it difficult to differentiate itself by reducing costs, understandable that there are
already more markets having the same cost-cutting strategies as they do, such as Albert, which
also sells most of the products manufactured by them.