A firm’s profitability as compared to the industry average can determine its relative position in the industry. The primary factor of above-average profitability in the long run is the sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess, these are low cost or differentiation. These two basic types of competitive advantage plus with the extent of activities for which a firm looks for to realize them, lead to three generic plans for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two models, cost focus and differentiation focus.


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