3. Above average returns- In order to earn above average returns, your business must have a competitive advantage over your rivals. In order to achieve an above average return, you must develop a competitive strategy. This means developing a strategy for how you are going to compete in the market place by cost-leadership means that you are the cheapest option every time or differentiation means that your product or service is different from others on offer which allows you to charge a premium price. To make a cost-leadership strategy work you would offer products of average quality for less than the average price. If you are the only one doing that, and you can actually produce at a lower cost, then you may have a competitive advantage and earn those above average returns.
