Provide an example of a business you are familiar with (or from your research) that engages in a cost leadership strategy and describe some methods used by the business to maintain the strategic position.
Provide an example of a business you are familiar with (or from your research) that engages in a differentiation strategy and describe some methods used by the business to maintain the strategic position.
Cost leadership strategy:
Cost leadership strategy is a strategy in which the company has a competitive advantage of having the lowest cost of operations in the industry. A cost leader is a company which has the lowest cost of operations in the industry. Thus, cost leaders earn huge profits.
Example of cost leadership strategy :
There are various examples like- Ikea, Walmart, McDonald's, etc.
Let's understand by taking the example of Ikea-
Ikea is into home furnishings and it has 100+ stores all across the world. It has achieved success just by keeping the costs down. The mission statement of Ikea itself represents cost leadership strategy (“Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” )
To keep costs low, Ikea-
1. Encourages its customers to select, transport and assemble Ikea products on their own. The philosophy behind this is - "You do your part. We do our part. Together we save money."
2. Instead of depending on third party manufacturers, Ikea's engineers make low cost, easy to assemble, furniture.
3. Sources its products in low-wage countries.
Differentiation Strategy:
By adopting a differentiation strategy, a company distinguishes itself from its competitors.
Examples of differentiation strategy:
There are various examples like- Apple, Nike, etc.
Let's understand by taking the example of Apple-
Apple is using differentiation strategies to distinguish itself from other electronics manufacturer.
It used differentiation in -
1. Product Design- When Apple released the iPod, iPad, iPhone, there was no similar device which offered many features in one device.
2. Pricing Strategy- Apple kept high price for its high-quality top-notch product, which led to high-profit margins.
Provide an example of a business you are familiar with (or from your research) that engages...
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