The level at which a company is on an industrial analysis point of view has a direct impact on the determination of the firm’s profitability and whether the profits being made are lower or above the set industrial average profitability performance. Being above the industrial average thus shows the firm can maintain a competitive advantage over its competitors. Profitability thus determines a firm’s competitive advantage over others. A firm thus can adopt a set of generic strategies all aimed at being ahead of its competitors. The strategies are called the porter’s Four generic strategies. The strategies include cost leadership, adopting a differentiation strategy, having a market cost focus and lastly having a differentiation focus. Through a focus strategy, one can either choose between a cost focus and probably a differentiation focus (Porter, 1980). Cost leadership guarantees that a firm becomes a market leader by having a low cost of its products. Differentiation entails a firm being unique through the various dimensions that its consumers identify with. Differentiation Focusing involves paying attention to a specific market segment only and concentrate on their needs. Finally, Cost focusing entails a pricing strategy tailored to a specific market segment.
The porter’s four competitive strategies (differentiation, cost, cost focus and differentiation focus) play a great impact in the determination a…
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