In this essay we will examine the different kinds of strategies and its working with different business.
1) Cost Leadership- is a business strategy that mainly focuses on gaining advantage by reducing its costs below to those of its competitors. The main test for this strategy is to earn suitable profit by reducing costs. However, a firm pursuing cost leadership strategy focuses its efforts on keeping cost low. The main advantages of Cost leadership are:-
- Economies of Scale – firms continue to grow but at definite rate. For example, if the volume of production increases, the average cost per unit will fall till it can reach a definite optimal point.
- Diseconomies of scale- firms here grow at a very fast rate which will eventually increase …show more content…
- Policy choices- products and services that the firms chose to sell should create a lower production cost.
Example of Cost leadership is Walmart Inc. has been successful in using this strategy to attract customers with its daily low prices. Its idea to offer merchandises at a cheaper rate than its competitors on a daily basis is a great advantage. Now, Wal-Mart is able to do such an exercise due to its large scale and efficient supply chain management. And, its source of products comes from cheaper domestic suppliers and from foreign markets. Company is able to generate a profit by selling items at low prices.
2) Product Differentiation- when a firm tries to increase its competitive advantage by maximizing the worth of their products or services relative to the value of other competitors of products or services. This increased value of the products or services give firms the opportunity sell at higher price than it would. This higher price can increase a firm’s revenues and generate competitive advantages.
It can simply be achieved be packaging of the goods in a inventive way by incorporating new functional features and creating new advertising campaign or other sales …show more content…
Types of Corporate Diversification are:-
- Limited Corporate Diversification- A firm that implements this strategy where most of its business activities fall within a single industry and geographic market. Two kinds of firms are included in this corporate diversification category: single-business firms operating in 95 percent of their total sales in a single-product market.
For example a Subway restaurant chain which generates sales by selling healthy sandwiches and salads. Dominant business firms- generate 70 to 95 percent of their total sales in a single-product market. For example IBM, which provides mainframe computers but also supply motherboards to its
1) Cost Leadership- is a business strategy that mainly focuses on gaining advantage by reducing its costs below to those of its competitors. The main test for this strategy is to earn suitable profit by reducing costs. However, a firm pursuing cost leadership strategy focuses its efforts on keeping cost low. The main advantages of Cost leadership are:-
- Economies of Scale – firms continue to grow but at definite rate. For example, if the volume of production increases, the average cost per unit will fall till it can reach a definite optimal point.
- Diseconomies of scale- firms here grow at a very fast rate which will eventually increase …show more content…
- Policy choices- products and services that the firms chose to sell should create a lower production cost.
Example of Cost leadership is Walmart Inc. has been successful in using this strategy to attract customers with its daily low prices. Its idea to offer merchandises at a cheaper rate than its competitors on a daily basis is a great advantage. Now, Wal-Mart is able to do such an exercise due to its large scale and efficient supply chain management. And, its source of products comes from cheaper domestic suppliers and from foreign markets. Company is able to generate a profit by selling items at low prices.
2) Product Differentiation- when a firm tries to increase its competitive advantage by maximizing the worth of their products or services relative to the value of other competitors of products or services. This increased value of the products or services give firms the opportunity sell at higher price than it would. This higher price can increase a firm’s revenues and generate competitive advantages.
It can simply be achieved be packaging of the goods in a inventive way by incorporating new functional features and creating new advertising campaign or other sales …show more content…
Types of Corporate Diversification are:-
- Limited Corporate Diversification- A firm that implements this strategy where most of its business activities fall within a single industry and geographic market. Two kinds of firms are included in this corporate diversification category: single-business firms operating in 95 percent of their total sales in a single-product market.
For example a Subway restaurant chain which generates sales by selling healthy sandwiches and salads. Dominant business firms- generate 70 to 95 percent of their total sales in a single-product market. For example IBM, which provides mainframe computers but also supply motherboards to its