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Question 49-52 are based on the following passage.
In 1980, Michael Porter released the seminal book Competitive Strategy Techniques for Analysing Industries and Competitors, which shared his work on techniques that businesses can use to achieve and maintain dominance in their respective markets. According to Porter, an engineer who later became an economist, differentiation, cost leadership, and market segmentation are the foremost generic strategies for dominating the market. Strategic scope and strategic strength are two additional variables to the equation and help define the terms under which the three previous conditions are to be analyzed. Porter contends that scope is considered a "demand-side" variable that illustrates the size and makeup of the desired market. On the other hand, strategic strength is deemed a "supply-tide" factor as it addresses the competency of the company itself. To help others visualize his theory, Porter created a diagram that depicts the overlapping of these specifications.
In the concluding summary of his research, Porter points out that, surprisingly, companies with both high and low market share we both profitable; the companies that suffer most in that respect are those that fail in the middle. Porter explains that the companies with high market share are those that have utilized cost leadership while the companies with low market share have taken advantage of market segmentation to hone in on a small but financially rewarding niche. Companies in the middle range, however, inevitably are those that lack a generic strategy and, therefore, are not as profitable.
The main purpose of the passage is to ....
offer evidence of a recently emergent trend in business modeling
argue that utilization of cost leadership best indicator of profitability for a company
describe a business study and discuss one of its unexpected findings for companies
show how following Porter's strategies can create increased market share for companies
disprove the traditional belief that one must increase market share to be profitable
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