An efficient business system creates cost efficiencies and economic of scales to allow a firm to become the lowest-cost producer. Porter researched hundreds of companies to identify the three primary ways companies achieve a sustainable advantage: cost leadership, differentiation, and focus. Because price represents such a powerful factor for consumers, it also represents an incredible competitive advantage. By producing huge quantities of standardized products that people can actually assemble themselves, IKEA has gained a significant competitive advantage with its cost leadership strategy. It can secure a higher profit margin for the company. Porter’s generic strategies are three-dimensional strategies that consist of three quadrants (or sometimes four, depending on how the matrix is drawn) called differentiation, cost, leadership, and focus. The three generic strategies of cost leadership, differentiation, and focus are discussed along with the advantages and risks inherent with each strategic option. Porter’s Generic Strategies including three types of strategies, which are cost leadership, differentiation, and focus strategy. The article includes tips for students and analysts on how to write good generic strategies analysis for a firm. The global online retailer operates with a razor thin profit margin and succeeds due to a combination of economies of scale, innovation of various business processes and a constant business diversification. Professor Michael Porter of Harvard Business School points out three methods by which a company can achieve sustainable competitive advantage – Cost Leadership. strategy works better than cost leadership strategy in order measure differentiation strategy was more than .7 and the to gain a competitive advantage in Carrefour . Cost leadership is a concept developed by Michael Porter, used in business strategy which describes a way to establish a competitive advantage. Cost leadership is one of three generic business strategies discussed by Porter in his well-known book, Competitive Strategy(1980).Essentially, a firm that follows a cost leadership strategy attempts to earn higher returns and competitive advantages through offering … Porter’s Generic Strategies are the standard basic strategies that a Business can follow. The company develops and maintains competitive advantage based on cost minimization, which translates to low prices or high profit margins. Range, price and convenience are placed at the core of Amazon competitive advantage. The following table illustrates Porter’s generic strategies: a) Cost Leadership Strategy This generic strategy calls for being the low cost producer in an industry for a given level of quality. 1.2 Main aspects of Porter's Generic Strategies Analysis Organisations can achieve competitive advantages essentially by differentiating their products and services from those of competitors and through low costs (Otundo Martin, 2016). 3. Generic strategies can help the organization to cope with the five competitive forces in the industry and do better than other organization in the industry. Porter is convinced that when companies decide on their competitive advantage model (precisely what groups they are going to focus on), it is important to determine if they are going to go ahead and take cost leadership strategy or differentiation strategy. Differentiation Focus. The manipulation of cost can be done in two ways such as, 1. Depending on these parameters, the strategies proposed are: Cost Leadership. This type of strategy meant for organizations that has goal to achieve the overall lowest cost structure in an industry. Cost leadership, in basic words, means the lowest cost of operation in the Cost Leadership. Porters stated that firms with high market share are the ones which are profitable and these firms become successful because they pursue the cost leadership strategy. By reducing the production cost, higher profit margins are available for the organization. The strategies proposed depend on: The Competitive Advantage of the company. Porter, author of Competitive Strategy, is widely known in business circles and is thought of as the father of modern business strategy theory.His central thesis is that businesses can create and sustain a competitive advantage in the marketplace by following one of two strategic choices: 1) cost leadership or 2) differentiation. To gain competitive advantage, small businesses can focus on different strategies, including leadership in cost, quality, innovation or customer service. The focus strategy is one of three generic strategies that Professor Porter created at the time: cost leadership, focus, and differentiation. Indicate whether the statement is true or false. There are two basic types of competitive advantage: cost leadership and differentiation.” Michael Porter Competitive strategies involve taking offensive or defensive actions to create a defendable position in the industry. Cost leadership is straightforward, as the player rolling this out will become the lost-cost producer in the industry. Cost Leadership is the mechanism of establishing a competitive advantage by having the lowest cost of operation in the industry. As Porter highlighted, a cost leader has to have a broad scope (and scale). If you sell your products or services for a lower price than your competitors, people will be drawn to your company. This strategy is especially beneficial in a market where the price is an important factor. Needless to say, the famous Swedish furniture retailer has absolutely revolutionized the furniture industry. Marketers have to produce large no of products so it will ultimately lower the unitary cost. Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether. If they were able to take the lead on a pricing strategy that had a higher price point for consumers, it opens the door to an improved profit margin on the goods or services. Differentiation. 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