The following table compares some characteristics of the generic strategies in the context of the Porter's five forces. Industry Force Generic Strategies Cost Leadership Differentiation Focus Entry Barriers Ability to cut price in retaliation discourages potential entrants. Customer loyalty can discourage potential entrants. Focusing develops core competancies that can act as an entry barrier. Buyer Power Ability to offer lower price to powerful buyers.
Large buyers have less power to negotiate because of few close alternatives.
Large buyers have less power to negotiate because of few alternatives. Supplier Power Better insulated from powerful suppliers. Better able to pass on supplier price increases to customers. Suppliers have power because of low volumes, but a differentiation-focused firm is better able to pass on supplier price increases. Threat of Substitutes Can use low price to defend against substitutes.