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idered as a cost and an investment. On the other hand, when a company differentiates its products, it is often able to charge a premium price for its products or services in the market.

Differentiation has many advantages for the firm, e.g.: successful differentiation strategy of a firm may attract competitors to enter the company’s market segment and copy the differentiated product (Lynch, 2003).

Differentiation can be achieved through a differentiated product, superior quality, and customer service etc. A key question to ask is whether the customers of the company perceive the point of difference as one that is worth a price premium.

Focus

As Porter noted, Organizations can make use of the focus strategy by focusing on a specific niche in the market and offering specialized products for that niche. Therefore, competitive advantage can be achieved only in the company’s target segments by employing the focus

strategy. In order to occupy a small and specialized group of buyers, a company probably charges a premium price for superior quality (differentiation focus) or offers a low price product.

The deficiency of the focus strategy is that the niche is usually small-sized and may not be significant or large enough to attract a company’s attention. And the focus on costs would be difficult in industries where there is lack of economies of scale. Moreover, there exists the risk that the niche may disappear, as the business environment and customer favorite change flukily.

Theoretically, the danger some organization face is that they try to do all three and become what is known as “stuck in the middle”. If a company has no clear business strategy and attempt to cover all consumers, the resulting additional running costs will eventually cause a fall in sales and market share. ‘Stuck in the middle’ companies are usually subject to a takeover or merger.

2. Nokia’s generic competitive strategies

As a Large hi-tech company, Nokia operates in fiercely competitive mobile markets. To succeed, Nokia need to shorten the cycle time of new product development (abbr. NPD hereinafter), while improving product quality and maintaining or reducing the total resources required. Their abilities to meet these business goals depend on how extensively and effectively they employ their owned technology、know-how and other resources in their product development. Apparently, high investment in R&D of fundamental and applicable technology builds better quality products and thus causes naturally the selection of differentiation strategy among 3 generic competitive strategies.

In the field of mobile phone industry, the most important representation of differentiation behaves as the capability of technology innovation. According to the investigation by leads the mobile phone industry. BusinessWeek in April.2006, i.e. the Top 100 Innovative Companies Ranking，Nokia (ranks 8th) largely exceeds other famous mobile handset manufacturers such as Samsung (12th) 、Sony (13th) 、Motorola (30th) 、Philips Electronics