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1. The Chapter Case states that P&G is pursuing a differentiation strategy. Looking at the value and cost drivers discussed in this chapter and the table entitled “Competitive Positioning and the Five Forces: Benefits and Risks of Cost-Leadership and Differentiation Business Strategies” in Exhibit 6.7 , identify the factors causing P&G’s business strategy to lose its luster. Why is P&G’s differentiation strategy no longer as potent as it once was?

2. Given the discussion in the Chapter Case about P&G slashing its R&D spending and cutting costs and jobs more generally, does the firm risk being “stuck in the middle”? Why or why not? If yes, why would being “stuck in the middle” be a bad strategic position?

3. Your task is to help Mr. Lafley sharpen P&G’s strategic position. Which strategic position along the productivity frontier should P&G stake out? Which value and/or cost drivers would you focus on to improve P&G’s strategic profile? How would you go about it? What results would you expect?

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