A business strategy specifies how a company will compete successfully. It answers the question "how will I beat my competitors?". Business strategy is also called "competitive strategy." To compete successfully, a company needs a competitive advantage - something in which it has an advantage over its competitors. If a company has no competitive advantage, sooner or later it will go out of business.
Porter (1996) identifies three "generic strategies":
- Lower cost - company can produce at lower cost than competitors
- Differentiation - company offers something different to competitors
- Focus - company can meet the needs of a set of customers better than competitors
See also industry structure.