Question

Ryanair, Wal-Mart, Casio and Hyundai are all cited as examples of firms pursuing cost leadership strategies, but these firms make substantial investments in advertising, which seems more likely to be associated with product differentiation strategy. Are these firms really pursuing a cost leadership strategy or are they pursuing a product differentiation strategy by emphasizing their lower costs? Please discuss.( This study: Strategic Management and Business Policy)(250-300 words)

Answer 1

Yes it is true that these industries are a great example of cost leadership Strategies and they also follow the policy of product differentiation. First I would like to explain the concept of cost leadership strategy, it is basically a strategy where companies working on the cost effective policies and strategies have the main focus on reducing the cost to follow a proper management program and plans and a project where caused can be easily handled. Basically the main purpose is to reduce the cost and it is possible only by the proper management strategies and policies in the organization.

The implementation of policies as on the basis to measure the cost of factors of production and utilize the resources efficiently and effectively. The optimum utilization of resources key factors to reduce the cost of production and this is the only way to manage and to maintain a strategy that is called as cost leadership strategy. But another way to its understanding is that, these industries are following the product differentiation concept. It is a concept where various products are available so that consumer has choices in front of him to choose the perfect product. And this is the only way that consumer can retain and become loyal for the industries. The relationship between consumer and the firm will furthergo in long run.