Question

what companies can be considered as either cost leader or differentiator. Please give an example and explain why

Answer 1

The answer:

According to Porter’s generic strategies, cost leadership, differentiation, focused cost leadership, and focused differentiation is the business level strategies of the organizations. Organizations tend to pursue either of the strategies or a combination of the strategies.

Cost leaders are the organizations that offer the products or services at the lowest cost with acceptable quality in the industry. For instance, southwest airlines are the cost leader in the airline industry. Walmart is the cost leader in the retail industry, while McDonald’s is the cost leader in the fast-food industry. These organizations have achieved operational excellence and reduced the cost of production drastically, which helps the organizations to produce the products at the lowest possible cost with acceptable quality.

Differentiator companies are the organizations that offer the best in class products in the industry and charge premium prices in the industry. For instance, 3M is the company that produces the most innovative products from adhesives to home care products. Apple is the differentiator in the electronics industry that produces the best in class mobiles, laptops, watches, and other electronic products. Budweiser is the differentiator in the beer industry, and BMW is the differentiator in the automobile industry.