Generic Strategy: Michael Porter
A term associated with Michael Porter. A company must be committed to one of three generic strategies in order to compete effectively in the market place:

Cost Leadership : Here the firm lays great emphasis on improving cost competitiveness. Cost leadership is facilitated by efficient-scale facilities, tight overhead control, careful selection of customers and standardization of activities. Gujarat Ambuja has pursued this strategy in the Indian cement industry. Maruti has done this in the Indian car industry. The largest retail chain in the world, Wal-Mart is also a cost leader. So is Dell in the PC industry.

DifferentiationA business strategy, which attaches more importance to providing value to customers in a unique way, which competitors cannot easily imitate. Different methods can be employed to achieve differentiation: design or brand image, technology, features, and customer service. In the process of differentiation, the firm cannot afford to ignore costs. But cost cutting is not the primary focus here. The emphasis is on creating unique value and charging a premium for it. A good example is Mercedes Benz.

Focus.A means of gaining competitive advantage by concentrating on one particular aspect of a product / service / market / geographic region that is important to a particular type of customer. In this way, a firm can be more effective than the other players in that chosen segment.

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