This paper takes Yunnan Baiyao as the research object, applying strategic management theory and analysis model. Firstly, the paper analyzes the industry of Yunnan Baiyao, and comprehensively analyzes the external environment of the enterprise by PEST analysis method, and then analyzes the microscopic environment of the industry by Porter Five Forces model. Secondly, the paper analyzes the internal environment of Yunnan Baiyao by SWOT model. According to its advantages and disadvantages, the most suitable competitive strategy for the development of Yunnan Baiyao will be proposed.According to which, five suggestions are finally put forward: First, to perfect the whole industrial chain; Second, to establish a research and development platform; Third, to create new core products; Fourth, to use the "internet +" model. Fifth, to actively undertake social responsibility of the enterprise.  Through the analysis of this paper, it can be concluded that differentiation strategy is the most suitable enterprise strategy for the rapid and healthy development of Yunnan Baiyao, and the implementation of differentiation strategy can make Yunnan Baiyao further enhance its core competitiveness and then achieve the strategic goal of the enterprise.