Increased global competitiveness, reduced product life cycles, rapid technological advancements, and dynamic customer requirements have drastically altered the nature of competition. Researchers and entrepreneurs have different ways how to achieve competitive advantages. This article examines one of the possible sources of competitiveness: differentiation strategy. The results of literature review show the systematization of differentiation factors in several categories depending on the differentiation subject. Differentiation subject that we argue are: product, firm and country. Our conclusion is that the most important differentiation sources of competitiveness are based on innovations, resources, quality, brand and strategy. Differentiation encourages learning, research, development and reflection in order to achieve higher level of competitiveness.