Generic competitive strategies—An analytical approach

Abstract The concept of generic strategies for gaining competitive advantage has received considerable attention recently in the business policy field. Two generic strategies usually mentioned are low cost position and highly differentiated position. This paper uses a game‐theoretic model of oligopolistic competition to provide analytical support for these generic strategies, and, in places, to refine the conclusions drawn from previous research in this field. Another conclusion derived from the model is that a superior cost or differentiation position leads to a larger market share, which in turn leads to higher profitability.