Notes - Porter's Generic Competitive Strategies

The broken laptop was better, but now is more broken, so no photoshopping for at least a week. However, I still want to bring you something from the notepad, so here's Porter's Generic Competitive Strategies.
Porter says firms can compete on cost or differentiation for the whole market or a niche. The organisation must choose a route that it wants to take and stick with it; it should not be distracted by the prospect of short term gains using other strategies.
Cost Leadership comes from increased efficiency in all areas of the value chain. Low cost does not need to lead to a low price - see Toyota. Generally cost leaders are like the easy-enterprise, with no frills. Ikea is a cost leader and also differentiater. Firms must be THE, not A cost leader. First mover advantage helps with this.
Differentiation allows organisations to meet customers' needs better. firms must differentiate on different factors to their competitors. The coffee shop market in St Andrews is an example of this. Firms can charge a premium for their Unique Selling Point (USP). Differentiation costs more money but can lead to high brand loyalty.
Focus requires customers whose needs are not met by the rest of the market and need specialist help. Focusers can compete on cost or differentiation and the narrower scope can be more affordable. Firms must ensure that they meet specific needs better than broad based organisations do. An example would be goalkeeper hockey sticks and their substitutes (children's sticks). Firms should be wary of their small niche collapsing and know that they can't cost focus in markets that need economies of scale. Focussed firms cannot compete where broad firms control a niche.
Critique Strategies are inflexible and can tie an organisation into a long term plan - they can paibnt themselves into a corner and miss out on other strategic options. it can be difficult for organisations to respond to their environment. Firms can be stuck in the middle if these strategies fail or they cannot define themselves. M&S's recent woes are an example of this. Organisations need more sophisticated strategies to compete in changing markets. A viable middle ground exists of creating a presence in a niche and then expanding.

This made more sense to me as an undergrad. I understand what it all means, but I don't understand the notes. Why have I got three main headings for a 2x2 matrix?

Also, please now note that this blog is a week away from its anniversary and has now changed its name to Idea102.