Practice question · Multiple choice
Porter argued that a firm pursuing both cost leadership and differentiation usually ends up 'stuck in the middle'. What is the mechanism?
Hints
- List what a cost leader cuts. Then list what a differentiator spends on. Compare the lists.
- Ask whether the two strategies want the same factory, the same staff, the same suppliers.
Show the answer
B. The two strategies demand opposite activity systems
Why
Strategy is a set of reinforcing choices, and the two positions want incompatible ones, so a firm hedging between them inherits the costs of both and the advantages of neither. The point is about trade-offs rather than perception, which is why option 2 mistakes the symptom for the cause.
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