Generic
Business Generic
A firm positions itself by leveraging its strengths. Michael Porter has argues that a firm’s strengths ultimately fall into one of two headings: cost advantage and differentiation which are applied at the business unit level. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.
In cost leadership, a firm sets out to become the low cost producer in its industry for a given level of quality. The firms sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. The cost leadership strategy usually targets a broad market
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceives as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price
The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.
The focus strategy has two variants: In cost focus a firm seeks a cost advantage in its target segment, while in differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser’s target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments,
A firm positions itself by leveraging its strengths. Michael Porter has argues that a firm’s strengths ultimately fall into one of two headings: cost advantage and differentiation which are applied at the business unit level. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.
In cost leadership, a firm sets out to become the low cost producer in its industry for a given level of quality. The firms sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. The cost leadership strategy usually targets a broad market
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceives as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price
The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.
The focus strategy has two variants: In cost focus a firm seeks a cost advantage in its target segment, while in differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser’s target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments,