Differentiation Strategies

A key aspect of business strategy refers to competing with rival businesses in an industry. In a perfectly competitive industry, firms would have great issues with competing in the market, it is however very unlikely that such industries exist as it is a theoretical market. In a perfectly competitive market, there are many buyers and sellers, who have no control of price as the good which they are supplying are identical, meaning that substitutes are widely available. This type of industry does not bode well for businesses aiming to have long-run success and profitability. While a detailed plan may be a useful tool for a business, this is not a strategy within itself, as plans alone do not result in sales of products. Business strategy is …show more content…
These three strategies are cost leadership, differentiation and focus. The aim of cost leadership would be to gain a competitive advantage over other firms in the market. This is done by either reducing costs or increasing market share. Therefore, the goal of cost leadership is to reduce the cost faced by the business, not necessarily the cost faced by the consumer. Differentiation strategy is to ensure that the product you are offering on the market is the most unique and attractive that can fill a potential gap in the market. For a firm to truly maximise the differentiation strategy the key point of focus would be to create a gap in the market with their product. Finally, a focus strategy is one where a firm understands the needs of the market fully, and specialises in said market to the best of their ability, by focusing and specialising on specific niche markets, by adding something extra that other firms do not …show more content…
Firstly, are our skills truly superior? It has been suggest that one of the easiest measures of superiority is research and development personnel assessments. However Coyne, Hall and Gorman Clifford debunked this belief by highlighting the unreliability of this method, saying that large firms such as Microsoft, are able to select from a large pool of the highest achieving applicants when hiring. Therefore this would not reflect their ability to hire and retain employees, as they have chosen the very best. Secondly, how sustainable is the superiority? This is suggesting that the rareness of the product highlights to the firm how core and profitable this will be. Rareness in relation to core competence is in regards to how easy it is for a firm to emulate and copy your product. Thirdly, how much value can the competence generate in comparison to other economic levers? For a successful core competence strategy, it needs to have a high value in relation to the markets it