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CS Professional · Strategic Management and Corporate Finance · Competitive Positioning

A mid-sized Indian hotel chain advertises luxury service but also tries to match budget rivals' prices, without a clear cost advantage or distinctive value. According to Porter, its likely position is:

The chain is stuck in the middle. It pursues luxury positioning and budget pricing at once without a real cost edge or distinctive value, so it fails to achieve any generic advantage and tends to earn below-average returns.

  1. AStuck in the middle with below-average returnsCorrect
  2. BCost leadership with superior returns
  3. CFocus with strong niche loyalty
  4. DDifferentiation with price premium

Explanation

Porter says a firm that fails to commit to cost leadership, differentiation or focus is stuck in the middle. It lacks the low cost to win price-sensitive buyers and lacks distinctive value to earn a premium, so returns are typically below average.

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