The Different Types of Business Strategies

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Introduction For businesses to remain competitive and exploit available opportunities, they must embrace a number of business strategies. In this text, I discuss the various types of business strategies and how they impact on a company's performance. Types of Business Strategies Some of the business strategies developed by Michael Porter are given by Schermerhorn (2010) as "cost leadership, differentiation, and focus" strategies. Below, is a discussion comparing, contrasting, describing and defining each of these strategies. Differentiation Strategy According to Schermerhorn (2010), "a differentiation strategy offers products that are unique and different from the competition." Hence basically, an entity that embraces this strategy is able to enhance its performance as clients consider its products and/or services unique from those offered for sale by the competition. Eventually, a firm using this strategy succeeds in building a strong base of loyal clients. It is also important to note that firms utilizing this strategy have an advantage of being able to set premium prices for their goods and services as the same are perceived to be unique by customers (Hitt, Ireland and Hoskisson, 2010). Examples of firms using the differentiation strategy according to Griffin (2010) include Mercedes-Benz, Godiva and Rolex. As opposed to the cost leadership strategy, a differentiation strategy is most appropriate when the clients being targeted do not happen to be price sensitive.

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