Question

1. a) What is a best cost provider strategy? Define. Explain how it is different from a cost leadership strategy (2 points).

b) Illustrate both strategies using a publicly-listed company for each strategy (i.e., 1 company for each strategy) within the same industry. Clearly identify the industry and the 2 companies you are discussing and explain how the companies are executing a best cost provider strategy and a cost leadership strategy? (2 points)

Answer 1

A best cost provider strategy is a technique which relies on the factor by offering customers the best value for money by focusing both on upscale difference and low cost. The ultimate goal for best cost strategy is to keep the costs and prices at the least with comparable quality and the best features.

In cost leadership strategy, a competitive advantage is gained by having the lowest cost possible in the market for operations in the market. It is driven by the company's size, scope, scale, efficiency and the experience they have. This is achieved by having the economies of scale.

The companies I would like to take are London Biscuits Berhad Group and ParleG In the food and baking industry. ParleG uses the cost provider strategy and London Biscuits uses cost leadership strategy. In this cake and snack food industry, ParleG works on the basis of providing the best biscuits at the most minimal cost. By sticking on their evergreen price in India, the company has always been in profit by having the most extensive sales volume because of least cost and highest quality. On the other hand, London Biscuits Berhad Group using the cost leadership strategy. It is the cost effective company using the advantages of economies of scale and the effective implementation of structural design of company of functional strategy. This makes the company be one strategic competitior and an industry leader with this cost leadership strategy and be a sustainable manner.