One of the main reasons organizations go into business is to make profits. Even Not-for-Profit organizations have a profit aspect in them, in that philanthropic activities ought to be self sustaining.
One approach a firm can use to make high profits is to monopolize an industry, or produce & sell at extremely low prices, in order to make high sales revenues, take a larger portion of the market share or even push competitors out of the market. This in essence is a production strategy, and works very well for basic commodities such as food products. For example, Wal-Mart offers lower prices than its competitors and makes its profits through selling large volumes of products.
However, in order for this approach to work, it has to rely on external environment conditions, such as import policies, industrial relations, tax policies and barriers to entry & exit, to be favorable. Also, all products have competition, since they are all fighting for a share of their customers. In short, the ability of these firms to operate profitably is not within their control.
Another strategy a firm could employ is the product strategy. This would ordinarily entail taking advantage of a population growing in number and purchasing power. The firm in this case makes money by selling consumers high quality, durable products at slightly higher prices; the sales revenues will be slightly lower but good sales margins will ensure profitability. This model works especially well for clothes, electronics and other household goods.
However, in order for a firm using this approach to remain profitable in the long run, the consumer base has to always grow in population and affluence. Any economic & political conditions changes may pose a threat to this.
An organization may also take a customer oriented marketing strategy. According to this approach, the customer is the most important