Final answer:
A growth strategy is used by firms to expand and diversify their production and market presence, aiming to increase market share and profit margins. Differentiation strategy focuses on making products appear unique to consumers, thereby gaining a competitive edge. Core competencies are crucial as specialized firms often outperform those with a wider product range.
Step-by-step explanation:
A growth strategy is a competitive strategy by which a firm significantly expands its capacity to produce goods and services, expanding and diversifying in the market. This type of strategy can involve introducing new product lines, adding new features to existing products, or entering into new geographical markets. Firms pursuing a growth strategy often aim to increase their market share, enhance their profit margins, and leverage economies of scale. For example, if a firm has a well-respected brand name that has been built up over many years, it may find it easier to venture into new product categories while maintaining the loyalty of its customer base.
In contrast, a differentiation strategy involves unique product offerings that stand out from competitors. This can be through innovative designs, superior quality, or customer service. Product differentiation makes consumers perceive that a product has unique attributes or benefits. For instance, relentless pursuit of innovation can allow a firm to create products with characteristics consumers desire, such as technology companies that introduce groundbreaking features in their devices.
It's essential for businesses to identify their core competencies and focus on developing these areas to achieve competitive advantages, rather than diversifying into a wide range of products. Specializing in specific areas can sometimes lead to more success than firms that try to cater to all markets.