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Four Competitive Strategies of a Business

  1. Four Competitive Strategies of a Business 
Cost Leadership 
The cost leadership strategy is typically only employed by large companies that can obtain products cheaply through economies of scale. They turn around and sell these cheaply purchased products to buyers, adding a minimal markup to keep the price low. The idea behind this strategy is to be the cheapest provider of a good or service -- making it difficult for your competitors to compete with you. Because this strategy requires economies of scale, it's poorly suited to most small businesses. 
Differentiation 
Companies that use the differentiation strategy offer unique products or services. Having a unique offering gives companies an advantage over their competitors because their competitors simply can't offer what they're offering. To develop unique products and services, companies often invest heavily in research and development -- something that many small businesses simply can't afford. Companies relying on differentiation need to be careful to not develop easily imitated offerings, because that can ruin the uniqueness. 
Low-Cost Focus 
The low-cost focus strategy is similar to the cost leadership strategy except that it focuses on a niche market. Instead of marketing a product to the entire population it is marketed to a particular segment of the population. The aim of the strategy is to then be the cheapest provider in that segment. For example, an electronics store might focus its market on a single town; its goal would then be the cheapest in the town but not necessarily the cheapest overall. 
Differentiation Focus 
The differentiation strategy, like the low-cost focus strategy, also focuses on a specific subset of the market. But instead of marketing a product or service as the cheapest, it's marketed as being unique in some way. For instance, a company might develop a product that is specifically made for left-handed people. By focusing on a narrow market segment, a company can focus its efforts which may require fewer resources than developing a product for the broad market. 

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