ABSTRACT
This chapter contains generic strategies; the principles on which it is based; underlying assumptions; guidance on application, and relevant issues; and related models. An organization should identify a strategic direction which is fundamental to establishing and maintaining a strong competitive position. The firm's strategy is to minimize costs, giving greater flexibility over pricing decisions. Cost leadership may be gained as organizations become more experienced than competitors in technical, process and marketing activities. As industries mature, imitations which reduce the perceived differentiation may come on to the market. However, without a generic strategy, the organization may unwittingly seek to be 'all things to all people', and become 'stuck in the middle'. Achieving cost leadership includes setting up and implementing an effective cost structure, competitive pricing and achieving economies of scale. A focus strategy helps to determine the specific competitive advantage that may be gained within a particular market segment.
