¶ … competitive strategies that can be used. The three generic strategies are to pursue cost leadership, differentiation or status as a niche product. Cost leadership reflects a strategy that emphasizes the pursuit of high volumes, a very high level of efficiency and results in large market share with low margins as a path to profitability. The underlying logic is that there is always a large market for a cost leader, so high volumes will be achievable. Differentiation is roughly the opposite, where the company seeks to cultivate special traits that differentiate the product or brand from its competitors. This differentiation allows the company to charge more, because it reduces the consumer propensity to substitute, which means that consumers are less price sensitive. Differentiation is sometimes pursued strictly as an exercise in branding, but some companies also use innovation. A company like Apple will use both innovation and branding in pursuit of differentiation (Badenhausen, 2013). A niche strategy will see the pursuit of a small but loyal market, usually with a highly-differentiated product. Any of these strategies can be executed successful for profit, but firms seeking to tread the middle ground might often find it difficult to compete against firms that are...

One such approach is to seek out the "blue ocean." This is a riff on the differentiated or niche strategies where the firm wants to create market opportunity for itself by finding areas of opportunity where there are no competitors (Kim & Mauborgne, 2004). There is a traditional way of thinking that locks companies into their ideas, and usually into highly-competitive markets. When companies are able to break free from that thinking, they are more innovative and can find new areas of success.
In order to settle on an appropriate strategy, a firm should engage in environmental scanning. This is a process that reflects the acquisition of information and insight about the external factors that drive a business. Companies often are focused on the internal because that is something that they can control, but external factors can be important to the success or failure of a business. Indeed, if a company identifies critical factors and acts on them, that company can develop new opportunities ahead of the marketplace, and furthermore can pursue strategies that defend against negative environmental influences.

In order to formulate…