Gaining Competitive Edge: Strategies for Low Cost & Differentiation - Essay Sample

Published: 2023-11-12
Gaining Competitive Edge: Strategies for Low Cost & Differentiation - Essay Sample
Type of paper:  Essay
Categories:  Company Management Strategic management
Pages: 3
Wordcount: 679 words
6 min read

Strategies help a company attain a competitive edge amongst its rivals and rise above them. A generic strategy will help you decide where you want your business to go and how to get there (Tanwar, 2013). Michael Porter suggests that there are three general means in which firms can realize a sustainable competitive advantage. These are focus on strategy, differentiation, and cost leadership. These major plans are then divided into five primary types: Low fee and best rate strategy, focus the best value and focus low cost, and lastly, differentiation. They are referred to as generic because they are not specific hence can be applied to all industries despite the size.

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In the cost leadership strategy, a company must start by setting low costs in its products than its rivals. The cost leadership plan emphasizes efficiency. A company takes cost advantages and experiences efficiency gains after producing uniform products in high volumes. To maintain this approach, it is essential to search for cost cuttings in all business aspects (Tanwar, 2013). The approach is then classified into two; best value strategy and low cost. The low-cost plan gives services at a lower price in the market to a wide variety of customers. The best rate strategy offers goods and services to clients at the best rate in the market. It targets to offer clients commodities at the fairest fee in comparison to the competitor’s goods with the same features. In this strategy, a company attempts to gain the market by attracting cost-conscious customers.

The differentiation strategy focuses on a company making their products different and more appealing than any other within the industry. The product must be unique in terms of branding, design, or customer service. Differentiation helps a company earn high returns in a specific business. It is directed at consumers who are relatively pricing insensitive (Viltard, 2017). This strategy aims at offering something challenging to copy and is strongly associated with an organization's brand. Through this plan, the company selects one or more features that many buyers recognize as essential and unique designs to meet these needs. A company attempts to differentiate itself along most dimensions to remain the most competitive. A firm can make its products unique and still sell them at a higher price. These different aspects will make the products sell quickly.

Thirdly, the generic strategy of focus rests its center of attention to serve the needs of a limited target customer group. A focus strategy targets markets where competition is weakest. By using this strategy, it is possible for a company to earn high returns on investments and gain a competitive advantage through effectiveness. This master plan is classified into two; Focus low cost and focus the best value. Focus low cost gives services to a lesser range of clients at the smallest fee (Tanwar, 2013). Through a focus on best value, a company gives services of their products at the best fee present in the market. This tactic purposes of giving clients goods that meet customer preferences than rival products do.

In conclusion, generic strategies help organizations do better than others and be able to cope with competitive forces. Generally, firms pursue only one strategy. Porter’s generic strategies involve the interaction between cost reduction, producing extraordinary products, and market focus strategies of companies. Other firms can even choose to differentiate a product and sell it at a lower cost. If a company targets clients based on offering low prices, it is offering a cost leadership strategy. If it chooses customers based on the uniqueness of attributes, it is using a differentiation strategy. Lastly, if an organization is using a focus strategy, then it is focusing on a few segments. Porter emphasizes that specializing well in one strategy is the best thing. The type of competitive advantage and the scope is reflected by the generic strategy an organization decides to use.


Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management, 15(1), 11-17.

Viltard, L. A. (2017). Strategic mistakes (AVOIDABLE): the topicality of Michel Porter’s generic strategies. Independent Journal of Management & Production, 8(2), 474-497.

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