CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
According to Porter, which of the following is a typical risk of a differentiation strategy?
A typical differentiation risk is imitation by competitors, which narrows the perceived difference between products. Since the premium price depends on buyers seeing uniqueness, copying weakens the advantage. Technological obsolescence of cost-saving investments is more typical of cost leadership.
- ARivals easily imitating the unique features, narrowing the perceived differenceCorrect
- BTechnological change making past investments or learning obsolete
- CBuyers' price sensitivity rising because the product is standard
- DCost proximity eroding as the firm scales up
Explanation
A differentiation strategy depends on buyers valuing uniqueness, so imitation by rivals that reduces perceived differences is a core risk. Technological obsolescence of past investments is mainly a cost leadership risk. The other options describe cost-based concerns rather than uniqueness erosion.
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