We begin our discussion of strategy formulation by defining business-level strategy,
strategic position, and generic business strategies. We then take a close look at two
key generic business strategies, introduced briefly in Chapter 1: differentiation and cost
leadership. We pay special attention to value and cost drivers that managers can use to
carve out a clear strategic profile. Next, we relate the two business-level strategies to the
five forces in order to highlight their respective benefits and risks. We then introduce the
notion of integration strategy —combining a differentiation and cost-leadership strategic
position—and explain why trade-offs make this difficult to implement effectively. We look
at changes in competitive positioning over time before concluding with practical Implications
for the Strategist.