The document discusses Michael Porter's generic strategies model which identifies three strategies for gaining competitive advantage - cost leadership, differentiation, and focus. It provides details and examples of each strategy. Cost leadership involves producing standardized products on a large scale at low cost. Differentiation focuses on making the product unique through features, quality, design or service. Focus involves targeting a narrow market segment and achieving either cost advantage or differentiation within that segment. The risks of each strategy are also outlined. The document then provides examples of Dell's successful implementation of virtual integration and targeting of customer segments to achieve cost leadership.

1. Generic Strategy Model<br />The Michael Porter’s Generic Strategy Model has argued that a firm’s strengths depend on two categories (1). Competitive scope- : (wide & narrow) and (2). Competitive advantages (low cost & product uniqueness). After combining these two categories the Porter model describe strategies to identify its strengths: cost leadership, differentiation and focus. This strategies help to make action plan for SBUs.<br />Cost Leadership Strategy -:

3. Under the cost leadership strategy, the corporation produces products at large quantity for mass at a lower cost. Either firm sells its product at average price to get more profit or at below average price (at minimum profit margin) to gain market share.

4. Even without price war, as the industry is mature and price decline, a firm can produce product more economically for being more profitable at longer period of time (economy of scale). It is usually targeted broad market.

5. Firms that succeed in cost leadership often have the following internal strengths:

6. Access to the capital required making a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome.