Porters Generic Strategies

Michael Porter determined that a business could follow one of three generic strategies

  • Cost leadership
  • Differentiation
  • Focus

Any enterprise not following one of these was said to be ‘stuck in the middle’ and although successful would not survive if there was an increased competitive pressure. They would not be able to create sustainable competitive advantage

Cost leadership

Business following this strategy would ensure there processes ensures they were the lowest cost producer or supplier in the market. This did not mean they served the market at the lowest price, their improved margins through low cost could be used to support the business in a variety of ways.

Differentiation

Differentiation is were the business creates differential advantage through features or service that sets their offering apart from others in the market. Thus creating as it were a unique market for their product.

Focus

Both the above are strategies for markets as a whole – but both could be applied to segments or niches in the market. This is essence the concept of Porters Focus strategy.

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