Key points

• There are three main strategies to attain a competitive advantage: cost leadership, differentiation, and focus (or market segmentation).
• Cost leadership means that an organization seeks to be a lower-cost producer. Margins may be small (price war) thus profit is achieved through larger volumes. Quality shall be comparable to what other competitors offer.
• Differentiation is creating a unique service or product offering that is unique in the marketplace. This strategy aims at offering something difficult to copy and for which customers are willing to pay a premium.
• Market segmentation strategy is narrower in scope than differentiation. An organization that chooses focus limits its scope to a segment of the market and a specific group of customers.

References

Pages 22-24, Ch. 1

Application

Choose an industry sector that you are familiar with. Then, populate the template(Links to an external site.) of Porter's Strategies Framework with examples of companies that you believe follow one of the three strategies: differentiation, cost leadership, focus. Choose three companies that share the same competitive environment.