Differentiation yields higher margins with which to deal with supplier power, and it clearly mitigates buyer power, since buyers lack comparable alternatives and are thereby less price sensitive.

The five competitive forces—entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among current competitors—reflect the fact that competition in an industry goes well beyond the established players.

Product Differentiation. Product differentiation means that established firms have brand identification and customer loyalties, which stem from past advertising, customer service, product differences, or simply being first into the industry. Differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome existing

Finding strategic moves that will benefit from a lag in retaliation, or making moves so as to maximize the lag, are key principles of competitive interaction. However, seeking to delay retaliation cannot be made a principle of strategy without qualification. A slow but tough retaliation may leave the initiating firm worse off than a quick but less

“Who should we pick a fight with in the industry, and with what sequence of

goals, current strategy, assumptions, and capabilities.1

Finding a situation that catches the key competitor or competitors with conflicting goals is at the heart of many company success stories.

Even though the focus strategy does not achieve low cost or differentiation from the perspective of the market as a whole, it does achieve one or both of these positions vis-à-vis its narrow market target.

One broad approach is to use superior resources and capabilities to force an outcome skewed toward the interests of the firm, overcoming and outlasting retaliation—we might call this the brute force approach.