Question

1.define competitive strategy and discuss how this type of strategy is different from other types of strategies that companies use.

2.define low-cost strategy and discuss the advantages and disadvantages of having a low-cost strategy. Please provide an example of a company and/or product that uses this strategy.

3.define differentiation strategy and discuss the advantages and disadvantages of having a differentiation strategy. Please provide an example of a company and/or product that uses this strategy.

4.define niche low-cost strategy and discuss the advantages and disadvantages of having a focus/niche low-cost strategy. Please provide an example of a company and/or product that uses this strategy.

5.define best-cost strategy and discuss the advantages and disadvantages of having a focus/niche best-cost strategy. Please provide an example of a company and/or product that uses this strategy.

Answer 1

1. In general there are three types of business strategies namely general strategies, corporate strategies and competitive strategies. Out of these, competitive strategies is long term action plan which help the business to gain competitive edge over rival counterpart. Porter has come up with 4 kind of competitive strategies business can opt for edge upon others namely (SMH, 2016) –

1. Cost leadership: In cost leadership Strategy Company become low cost producer due to one or may reasons like economy of scale etc.
2. Differentiation: in differentiation Strategy Company come up with unique and different product for a section of consumers. The product provides it a uniqueness and edge upon other.
3. Cost focus: In cost focus Strategy Company seeks cost advantages but only for target segments unlike cost leadership.
4. Differentiation focus: in differentiation Strategy Company come up with unique and different product for a section of consumers. The product provides it a uniqueness and edge upon other.

Example of the company using competitive advantage strategy:

• Amazon Prime is using its speed in term of delivery and services as competitive advantage above others. It focuses on the customers with prime membership and provides speedy delivery and return services to them.
• UBER Eat is being using associate app where customer just have to select their favorite restaurant in nearby area and place an order.
• Samsung electronics uses its economy of scale to provide cheaper electronics to market.

Difference between competitive strategy and other strategies –

• Competitive strategy talks about the uniqueness a company can provide in term of product or cost or marketing etc. for example adding new features to cell phone is a growth strategy but adding unique features which no other cell phone have will be a competitive starategy.
• Other strategies focus on expansion and growth on the basis of acquisition, merger etc but competitive strategy emphasis on growth on the basis of market or product differentiation.

Overall competitive edge can be gained by a company by uniqueness of its product or market while other strategies outcome can be gained by capital investment or acquisitions.

Q.2 Low cost strategies: In low cost strategy companies introduces product at lower price than its rival which provides it a competitive edge upon others (Smith, 2016).

Advantage:

• Provide a competitive advantage upon rivals. It also open wide customer base to the company.
• Provide high level of expertise and efficiency.

Disadvantage:

• These kinds of strategies can only be implied by larger companies which have obtained economy of scale overtime.
• With time other firms will also be able to reduce its prices.
• Sustainability of cost leadership is hard.

Example of companies/product adopting low cost strategies: Wal-Mart provides cheap products tha another retail stores with its low cost strategies which it has attain through economy of scale in supply chain management.

Q.3 Differentiation strategy: a differential strategy calls for development of unique product and services which provide a competitive edge (al K. e., 2007).

Advantage:

• Access to leading scientific research.
• Highly skilled and creative product development
• Corporate reputation for quality product

Disadvantage:

• It requires huge investment in research and development.
• Customer can become price sensitive and choose price rather than product unique
• Imitation by competitors.

Example of companies/product adopting low cost strategies: Mecdonals and fedex uses differential strategies McDonalds provide food 10 times faster than its counterpart during working hours to employees which come for a 10 minute break.

Q.4 niche low-cost strategy : Niche low cost strategy focus on a particular niche to provide low cost product unlike low cost strategy which cover all market segments (al R. e., 2014).

Advantage:

• Lower investment required
• Firm gain from specialization
• Make new market entry easier

Disadvantage:

• Curb the growth opportunity
• Vulnerable to declination in the chosen market segment
• Risk of change in market segment.

Example of companies/product adopting low cost strategies: pepsico has strength its competitive position by focusing on different segments and offering low cost to consumers segments.

Q.5 best-cost strategy: A best cost strategy provides better value for money to consumers focusing on lowering cost and upgrading product quality (al m. e., 2004).

Advantage:

• Provide value to customer’s money.
• High customer’s satisfaction rate.

Disadvantage:

• Hard to execute as differentiation based on quality and cost is hard to achieve.
• Costly in term of product development and advertising

Example of companies/product adopting low cost strategies: Amazon has quality product while lower cost .It maintain its lower cost by being an e-commerce firm rather unlike Wal-Mart etc. Its product quality is maintained by efficient supply chain management which it has gained over period of time.

References

al, K. e. (2007). Consumer trust.

al, m. e. (2004). consumer behaviour.

al, R. e. (2014). startegic finacial mangment.

SMH. (2016). SMH buisness. Buisness journal , 34.

Smith. (2016). The marketing strategy . oxford press .