There are three generic strategies that are commonly used in business, the niche strategy, the cost leadership strategy, and the industry leadership strategy. A niche strategy only works for a small market, as it focuses on a small, under-served market niche. Cost leadership is difficult because it involves low profit margins and high turnover. Being an industry leader, although difficult, can be very profitable because it allows a business to charge higher prices and to have high sales levels.
One of the most innovative companies of the past decade has been Apple. After slipping out of consumer consciousness during the early to mid 1990s, Apple re-emerged in the 21st century as Steve Jobs returned to the helm and made Apple into an industry leader. Apple is now recognized not only as an industry leader in computers, with its highly successful line of Macs, but as an electronics leader with its innovative iPod, iPhone, and iPad. Apple has even managed to break into the music industry, surpassing Wal-Mart as the largest music distributor in the world. This position as an industry leader allows Apple to sell its computers and electronics at a higher price than other companies with similar products.
Being a market leader doesn't require in depth financial analyses of market conditions. What it does often require, is innovation. Innovation is something that can be very costly. Innovators like Pfizer and 3M must invest a large percentage of their profits into research and development. It is only through this investment that these companies can maintain their positions as industry leaders. At the same time companies must balance research with action, requiring firms to be ambidextrous in order to achieve a sustainable competitive advantage.
People often think that an industry leadership strategy only works in a technology related business. This is not true however. In fact, it can be difficult to obtain industry leadership in a technology heavy business and many products in this industry are successful in using a niche strategy. Industry leadership may actually be easier to achieve in a business where your competitors are not investing in technology to become an industry leader. This is good news if you want to work for an industry leader but don't want to work in a high tech field, so if you are sending out resumes, you don't need to focus exclusively on the technology firms in the city.
Industry leadership is not the right strategy for everyone. A business offering lessons in photography for example is probably better off using a niche strategy; while a pool opening and closing service and maintenance business say, might be more successful in using a price leadership strategy. The proper strategy for a business will depend on both its internal strengths and external market conditions.