Which of the following are the three generic business strategies identified by Michael Porter for entering a new market?

• A. Vertical integration, horizontal integration, and conglomeration
• B. Cost leadership, differentiation, and focus
• C. Product innovation, market penetration, and diversification
• D. Price skimming, cost-plus pricing, and bundling

Answer: (B)

Verified step by step guidance

1. Understand that Michael Porter identified three generic business strategies that firms can use to gain competitive advantage when entering a new market.
2. Recall that these strategies are based on how a firm positions itself relative to competitors in terms of cost, product uniqueness, and target market segment.
3. The first strategy is \textbf{Cost Leadership}, where a firm aims to become the lowest-cost producer in the industry to attract price-sensitive customers.
4. The second strategy is \textbf{Differentiation}, where a firm offers unique products or services that are valued by customers, allowing it to charge a premium price.
5. The third strategy is \textbf{Focus}, where a firm targets a specific market niche, either through cost focus or differentiation focus, tailoring its offerings to that segment.