Question

1. Define each of the four business strategies (Differentiation, Low-cost, Speed, and Market focus).

2. Identify skills and resources required by each business strategies.

3. Discuss the benefits and risks of adopting each of the business strategies.

Answer 1

1) Four business strategies and the corresponding explanations are:

- Differentiation: In this technique the company aims to manufacture a unique product which is currently not available in the market, the innovativeness in the product makes it different from what the competitors are selling and hence the customers tend to buy more.

- Low Cost: In this strategy the company rolls out the product at a lesser price i.e. the company takes a hit on the per product profit but the overall profit increases because the volume sale increases.

- Speed: It produces at a quicker price and with time the value of the product increases so initial needs are also satisfied and the long term goals are also achieved.

- Market Focus: In this strategy the company works for only a niche sector i.e. it choses its segment and all marketing and production techniques are aligned towards that segment only.

2) Skills and resources required are:

- Differentiation: Innovation in processes and latest infrastructure and required expertise.

- Low Cost: Cheaper raw materials and prior knowledge of manufacturing similar goods.

- Speed: Tenured employees and availability of raw materials in surplus.

- Market Focus: Proper segmentation and bifurcation along with secondary research of customers.

3) Benefits and risks are:

- Differentiation: Edge over the market but the risk is that it might fail since it is new.

- Low Cost: Higher traffic but the risk is that profits would be less.

- Speed: More customers buying but poor quality sometimes is a major risk.

- Market Focus: Adequate marketing but the risk is that of the tastes and needs of that market changes so there is no backup plan.