According to Porter's generic strategy model, organizations have three basic strategic options at their disposal to gain a competitive advantage. The cost leadership strategy is difficult for small businesses to implement because it involves a long-term commitment to offering products and services at the lowest prices in the market. To do this, companies must produce products cheaply, otherwise they will not make a profit. Identifying the attributes of a product that are unique to industry competitors is the driving factor behind the leadership strategy in differentiation.
When a product is able to differentiate itself from other similar products or services on the market through superior brand quality and value-added features, it may charge higher prices to cover the high cost. This strategy is quite similar to the cost leadership strategy; however, an important difference is that the cost-focus strategy that companies target a particular segment of the market and that segment is offered the lowest price for the product or service. This type of strategy is very useful for satisfying the consumer and increasing brand awareness. Like the cost-focus strategy, the differentiation approach strategy targets a particular segment of the market; however, instead of offering lower prices to the consumer, companies differentiate themselves from their competitors.
The differentiation strategy offers unique features and attributes to attract your target segment. For example, Breezes Resorts is a company that has several resorts and caters only to couples who do not have children and offers a quiet environment without the children getting upset.
Businessstrategy encompasses all actions and approaches to competing against competitors and the ways in which management addresses various strategic problems. .
As stated above, a company has a sustained competitive advantage when it can maintain a profit rate above the industry average for several years. According to Porter, any of these strategies is capable of generating a competitive advantage for a company in a given market. This strategy is very important when companies have a competitive market and several similar products available to consumers. As mentioned earlier, competitive strategy is a long-term plan of action by companies to gain a competitive advantage over their rivals in the industry.
If competitors are firmly committed to doing business in a certain way, they won't suddenly imitate a company's innovation. Competitive strategy includes those approaches that prescribe several ways to create a sustainable competitive advantage. Apple has a consistent practice of developing new products and its ability to make products complement each other, reinforcing customer loyalty and helping to create a barrier for competitors in the market. Michael Porter has identified four types of competitive strategies that can be applied in any business organization regardless of the size and nature of the products.
This means that competitive strategy refers to the actions that managers take to improve the company's market position through customer satisfaction. The downside of the cost leadership strategy is that competitors will enter the market (new entrants) when old cost structures are replaced by more efficient structures (e.g. Ej. Since achieving and maintaining competitive advantage is the primary objective of competitive strategies, managers must take steps to maintain competitive advantage once they are achieved.