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  • Sources of Competitive Advantage: Cost Leadership Differentiation

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    Joan Leonor
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    This document discusses Porter's generic strategy model which divides competitive strategy into three categories: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs to produce goods or services. Differentiation means making products or services distinct from competitors in ways valued by customers. The focus strategy targets a narrow customer segment by specializing products based on either low costs or differentiation.

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    Porter's Generic Strategy

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    This document discusses Porter's generic strategy model which divides competitive strategy into three categories: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs to produce goods or services. Differentiation means making products or services distinct from competitors in ways valued by customers. The focus strategy targets a narrow customer segment by specializing products based on either low costs or differentiation.

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    6 views1 page

    Sources of Competitive Advantage: Cost Leadership Differentiation

    Uploaded by

    Joan Leonor
    This document discusses Porter's generic strategy model which divides competitive strategy into three categories: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs to produce goods or services. Differentiation means making products or services distinct from competitors in ways valued by customers. The focus strategy targets a narrow customer segment by specializing products based on either low costs or differentiation.

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    © All Rights Reserved
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    Porter’s Generic Strategy

    Competitive Scope
    Sources of Competitive Advantage

    Lower Cost Differentiation

    Cost Leadership Differentiation


    - affordable selection of fried - high price but enjoyed by many
    Broad potato - have different flavors
    Target - simple and cheap flavored fries - has more product offering
    - convenient

    Cost Focus Focus Differentiation


    - cheaper price - unique
    - limited flavors - higher price than the usual price of a
    - usual fries regular fries
    Narrow
    Target - healthy

    French Fries
    Street Vendor

    Porter’s Generic Strategy is a management model that was used to determine the course of
    one company. It can be applied to products or services in all industries. Michael Porter’s divided this
    strategy into three parts: cost leadership, differentiation and focus. Cost leadership is about
    minimizing the cost to be a leading lowest-cost producer. Differentiation involves making products or
    services different from and more attractive that the other competitors.

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