The Rwandan Tea Industry Essay

623 Words Jul 17th, 2008 3 Pages
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Essay Sample
Situation Analysis In 2003, Rwanda government wants to transform tea industry that produces in the country into global market. To face with global competitors, the government believes that the industry should develop diversification and value-added product to improve quality and productivity as well as maximize revenues so the government moves the industry into private investors to attract technology, management expertise and stimulate the country’s plantation to invest in a higher quality

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Alternative Actions

1. Cost Leadership - offer the lowest price in the market.

2. Differentiation - Add value to improve quality to its product.

3. Using an Integrated Low-Cost/Differentiation Strategy.

Evaluation of Alternatives

Cost Leadership

Pros

• Compete for a wide customer based on price.

• Low costs will permit a firm to sell relatively standardized products that offer features acceptable to many customers at the lowest competitive price.

• Low price will gain competitive advantage and increase market share

Cons

• The competitors can develop a lower cost base than the existing cost leader in the market.

• Less customer loyalty.

• Low prices will result in creating a negative attitude towards the quality of the product.

• Customer’s impression of Rwanda teas will shift towards a product which might be higher in price but projects an image of quality.

Differentiation

Pros

• The company can charge a premium for its product.

• More earning above average returns.

• Customers develop brand loyalty

• Differentiation creates a better barrier to entry than cost leadership.

Cons

• Difficulty maintaining premium price.

• Agile competitors can quickly imitate.

Using an Integrated Low-Cost/Differentiation Strategy.

Pros

• More effectively leverage core competencies across business units and products lines which should enable the firm to produce produces with differentiated features at lower
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