At the end of the day, there’s always only two types of strategy. It’s either cost-leadership or differentiation. Cost leadership strategies are about the supplier opportunity cost, basically finding ways within your value chain to play with the supplier opportunity cost. Supplier opportunity cost is the least amount a supplier is willing to accept for their goods or services. If you can reduce the supplier opportunity cost across your value chain, then you are are cost-leader. Some firms choose to do this with backward and forward integration. If you were purchasing your plastics from Mukwano or Nice House of Plastics, you decide to bring in your own blow moulder.

Differentiation on the other hand is basically about increasing the buyer’s willingness to pay. What are you doing over and above your competition that will give you the leverage to charge a higher price? Is it convenience? Is it a more effective product? Is it better packaging? At all times, a firm is navigating between cost leadership strategies or differentiation strategies.