conclusion of cost leadership strategy
Firefly does not provide cab rental services for customers. Customers felt dissatisfy as they have to buy expensive snack in plane even tough in a long flight. Though it started as an online bookstore, its success in its venture spurred it to diversify into selling anything that can be sold online. Disclaimer: This essay has been written and submitted by students and is not an example of our work. A good example of focus strategy would be the Haagen-Dazs company. Pretoria. In conclusion, Starbucks is leading the market because of their dominating global presence and product differentiation as opposed to Dunkin' Donuts' cost leadership strategy. Customers’ demand on a differentiated product will be less elastic than that for products by competitors. In simple terms, cost leadership can be explained as when a company tries to get a competitive edge by reducing the price of the product.For example, Chinese mobile brands like Xiaomi and Oppo use cost leadership strategy and charge their products, which are primarily mobile phones, very less compared to others like Google and Apple.. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. As there is always an element of uncertainty about the future, strategy is more about a set of options than a fixed plan. Cost leadership strategy is vital in business management especially in an industry with stiff competition. Seats in Air Asia airplane is up straight and is uncomfortable but FireFly airplane seats is broad and comfortable. Mintzberg, H., Ahlstrand, B. and Lampel, J. conclusion section. Please click this link to view samples of our professional work witten by our professional essay writers. Strategic. Needless to say, the famous Swedish furniture retailer has absolutely revolutionized the furniture industry. Besides that, FireFly flight attendance as FireFly recognize the linkage between guests’ satisfaction is long-term success. The premises of the strategy chosen and the risk, advantages and, disadvantages of the strategy were also mentioned within question one. Risk for this strategy is customers with low loyalty. Introduction 3. Differentiation is needed when there are specific demands from customers. Managers need to take care of these pitfalls so that they cap, undertake appropriate measures to be successful with this strategy. cost leadership strategy) or competing by providing unique products in terms of quality, physical characteristics, or product related services (i.e., a product differentiation strategy). A firm using focus strategy enjoys higher degree of customer loyalty. This strategy will be positioning the business against competitors. Cost advantages may not sustain if competitors can easily imitate the strategy. The unique and special coca-cola recipe is formulated in the 19th century. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! In the case of cost leadership, one advantage is that cost leaders’ emphasis on efficiency makes them well positioned to withstand price competition from rivals (Table 5.3 “Executing a Low-Cost Strategy”). With Porter’s Generic Strategy, an organisation could gain more competitive advantage in the market. It is mainly focus on operating and executing the decision from the business strategy and corporate strategy. 2. Overall in this essay we looked at management styles and cost, "Implats, Aquarius fall on Zimbabwe indigenisation news". Easy access to airport will be the expectations of customers. Customer expectations are the trusts about service delivery that serve is as standards or reference points against which performance is judged. Similarities and differences between Air Asia and FireFly. This will benefit the price sensitive customers. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. The first question of this essay referred to the first case study. It focussed on classifying, and the strategic fit. Porter’s Generic Strategy is useful but it has its limitation. Pretorius, M. 2008. Conclusion; References; Appendences; Click here to download the full report: Learning From Leadership: Investigating the Links to Improved Student Learning. Customers wish to have refreshments in the plane to reduce fatigue during a long flight. Air Asia turnaround time is 25 minutes, is the lowest compare to others airline. Haagen-Dazs focusing on the industry had ensured it to have continuously improvement over years. Operation Decision, Strategy … Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. The writer had chosen Air Asia Berhad and FireFly Airline as the research companies. Focused cost leadership is the first of two focus strategies. Customers would not likely to waste their time for waiting. Organisations which apply cost leadership strategy will enjoy a higher average profit from their products. It focussed on identifying and, describing the business level strategy of Impala Platinum Within this question, Impala, Platinum business level strategy was classified and the identified strategy was. Customer felt happy as they could travel in low cost. Seats in Air Asia are up straight and very uncomfortable. When a firm implements this strategy, the firm can compete with other firms and get higher profits. Customers are satisfy and happy for the web check-in service as they do not need to wait in a long queue. Several examples of firms pursuing a cost leadership strategy are illustrated below. Cost leadership is a strategy that having lowest operational cost and lowest prices in the target market segment. A cost-focus strategy is a low-cost, narrowly focused market strategy. Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether. In the writer’s opinion, the selecting of strategy to be implemented is crucial as it will be affecting the organisation for a long term. Haagen-Dazs is a luxury ice-cream brand which established in 1961. Customers expect to short check-in time. It is use to maximize the performance of an organisation in the market. Corporate strategy seeks to develop synergies mainly by sharing and coordinating staff across business units. Focus On Cost Leadership Strategy Management Essay. The company must use only one out of three competitive strategies. Acquiring qualit… All of the six strategies designed by porter enlists the interaction between pr… After the research about Porter’s Generic Strategy, the writer is more understand about business strategy. Customers expect to have cheap food and beverages when travelling with aeroplane. Besides that, this strategy is use to foresee changes in demand and technologies. In addition, targeting either a narrow or broad market helps firms further understand … Chapter 6: Selecting Business-Level Strategies. The areas of FireFly delivering customer expectation and not delivering customer expectation. COST LEADERSHIP STRATEGY AND SUSTAINABLE COMPETITIVE ADVANTAGE OF NAIVAS SUPERMARKET LIMITED IN KENYA SEBASTIAN MUTISO MUASA A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLENT OF THE REQUIRMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS, UNIVERITY OF NAIROBI November, 2014 . Executives must identify their firm’s source of competitive advantage by choosing to compete based on low-cost versus (often) more expensive features that differentiate their firm from competitors. Activities of Air Asia and FireFly in delivering customers expectation. Department of Business Management 2014. Department of Business Management, University, Critical Variables of Business Failure: A review and, Department of Business Management, University of, University of South Africa. Cost leadership strategy that an organisation applied could be easily simulated by competitors. … Air Asia had cut off free drinks and food for passenger in short flight. The unique recipe had not been copied throughout the century. The cost leadership strategy usually targets a broad market. ii … Company Registration No: 4964706. Cost leadership are difficult to maintain due to imitation and competition. It is to develop a product or service that is unique and valued by customers. Differentiation strategy will involve greater cost. A. This strategy is aim to get cost advantage and become a low cost producer. The second, question of this essay referred to the second case study. Customers wish to get low fare tickets. By producing huge quantities of standardized products that people can actually assemble themselves, IKEA has gained a significant competitive advantage with its cost leadership strategy. Free resources to assist you with your university studies! Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Strategic strength plays an important role in success of a company and is known as strategic necessities such as good quality at low cost. Portougal, V., & Sundaram, D. (2005). The first, question of this essay referred to the first case study. One case study was reviewed. Different organisation in different industry would have applying different type of strategy. Therefore, strategy can be defined as an efficient use of the available resources to achieve the main goal. Thus a cost leadership strategy helps create barriers to entry that protect the … The big plane maximised passengers in minimum flights. 3 Types of Strategies 14 231 Cost Leadership Strategy 15 232 Differentiation from BUS 401 at University of South Carolina This will help the company to survive and minimize the risk, but if the company does not choose one of three competitive strategies, then there would be a loss of resources. When a cost leadership strategy is being employed by a firm, the firm must be careful not to use such aggressive price cuts that its own profits are nonexistent or low similarly, low Haagen-Dazs had experimented, tested and ultimately perfected the world’s finest ice-cream. Functional Strategy is the level of operating divisions and departments. Cost leadership strategy is vital in business management especially in an industry with stiff competition. Web check-in service for customer would have delighted customers as they do not need to wait in a long queue. FireFly provides complimentary refreshments for passengers in a long flight but Air Asia has snack for sell on plane. As technology improves, competitors may be able to surpass the production capabilities, thus eliminating the competitive advantage of the organisation. Big W Company has adopted the cost leadership strategy to improve its efficiency through streamlining operations. Study for free with our range of university lectures! Cost leadership is a strategy that having lowest operational cost and lowest prices in the target market segment. Variety flavor and creative flavor had been introduced for customers’ specific wants. The flight attendance in the airplane is friendly and polite to the passengers as Air Asia knew that linkage between guests’ satisfaction is a long term success. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. The technology industry is very competitive and requires firms operating in it to be very intense in their strategies in order to not only gain competitive advantage, but also operate profitably. It is in the context of the overall generic strategy which a firm may be pursuing that strategic options may be usefully considered. Our academic experts are ready and waiting to assist with any writing project you may have. We began this investigation of the links between leadership and student learning more than six years ago. Let us examine the implications of each of the three generic strategies. Therefore, differentiation strategy can create an additional barrier for market entry for newcomers. Revised edition. Companies can adopt business-level strategies and corporate-level strategies, which will make them more attractive to customers. Price sensitive customers might choose on price rather than uniqueness. When a firm implements this strategy, the firm can compete with other firms and get higher profits. This strategy is especially beneficial in a market where the price is an important factor. One case study was reviewed. Amazon is the world’s largest online retailer and is indeed a pioneer in the online retailing space. Simply being amongst the lowest-cost producers is not good enough, as you leave yourself wide open to attack by other low-cost producers who may undercut your prices and therefore block your attempts to increase market share. Before selecting which strategy is the most suitable for an organisation, the leader should ask few questions. Customers will expect seats in plane to be comfortable. Cost Leadership is the mechanism of establishing a competitive advantage by having the lowest cost of operation in the industry. Strategy is also the direction or scope of an organisation over the long-term, which to achieve competitive advantage for the organisation in the market within the challenging surrounding, to meet the needs of markets and to fulfil stakeholder expectations. If you need assistance with writing your essay, our professional essay writing service is here to help! The main benefit that companies or organisations could obtain is gaining competitive advantage. ...Cost Leadership Cost leadership that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. In most of the airport, there is a long queue at the check-in counters. Even though this paper may state that the Combination strategy has been implemented successfully, this literature review is having some limitation on data and analysis to make a sound conclusion. We're here to answer any questions you have about our services. Specifically, the presence of a cost leader in an industry tends to discourage new firms from entering the business because a new firm would struggle to attract customers by undercutting the cost leaders’ prices. Reflectively, the concept, as proposed by Porter, is a mean of establishing a sustainable competitive advantage over other player in the industry. When Porter’s generic strategies are not enough: Complementary, strategies for turnaround situations. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Organisations could gain advantage in price war for the products. Management This strategy used by businesses to create a low cost of operation within their niche. Cape Town: Oxford University Press Southern Africa. Management Review, ISSN 0008-1256, 30 (1) 11-24. In this essay, a request was given by Impala Platinum’s management team that we look into their current business situation. Differentiation Strategy … When there is a lower price product, customers will go for it. Differentiation strategy is a strategy that differentiates the product by a firm from others in a same industry. Business processes: Schall, M. S. (1983). Conclusion Achieving a Cost leadership strategy might not be for every company. The Cost Leadership strategy is exactly that – it involves being the leader in terms of cost in your industry or market. However, not every organisation is suitable to implement three strategies. Porter’s 5 Analysis 3.2. Do you have a 2:1 degree or higher? If competing firms are unable to lower their costs by a similar amount, the firm may be able … Customers expect to easy access to the airport. (Impala Platinum Corporate Website, 2014). Corporate Strategy, (2014) Available from: Strategic Management: Developing sustainability in. The primary objective of a firm aiming to attain cost leadership is to become the lowest cost producer in comparison to the competitors. VAT Registration No: 842417633. The Cost Leadership Strategy Published Date: 23 Mar 2015 Last Modified: 18 May 2017 Disclaimer: This essay has been written and submitted by students and is not an example of our work. The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Figure 5.3 image description: Cost Leadership. A good example for differentiation would be the Coca-Cola Company. Porter, author of Competitive Strategy, is widely known in business circles and is thought of as the father of modern business strategy theory.His central thesis is that businesses can create and sustain a competitive advantage in the marketplace by following one of two strategic choices: 1) cost leadership or 2) differentiation. Risk for this strategy is customers with low loyalty. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. One case study was reviewed. It may lead to a price-war that may lead to lower profitability. Strategic)HRM) GROUP&REPORT& 3&) TABLE OF CONTENTS 1. The first question is, “should we compete on low cost basis, or should we differentiate the products or services to gain more advantage?” Then, the second question would be, “should we compete head to head with our main rivals for the market share, or should we focus on just a market segment which is profitable?”. A focused cost leadership strategy requires competing based on price to target a narrow market "Focused Cost Leadership" [Image missing in original]).A firm that follows this strategy does not necessarily charge the lowest prices in the industry. Customers would feel unhappy. All work is written to order. Porter distinguished between two types of strategies: differentiation and cost leadership. According to Kumar (2010), “In other words, corporate level strategy takes a view at the overall scope of an organization and how to enhance stakeholder value.” Corporate level strategy is anxious about the objectives of the corporation and how the business should be managed. The Yugo, for example, was an extremely unreliable car that was made in Eastern Europe and sold in the United States for about $4,000 in the 1980s. Customers that live far away from its airport could not reach airport easily. The differences between Air Asia and FireFly are Air Asia provides rental cab services but FireFly does not provide the service. 1st Jan 1970 This chapter explains generic business-level strategies that executives select to keep their firms competitive. It is tempting to think of cost leaders as companies that sell inferior, poor-quality goods and services for rock-bottom prices. Corporate Strategy is analysing and evaluating business opportunities in areas with complementary activities. Customers felt unhappy as the accessibility to FireFly airport is low. This preview shows page 12 - 16 out of 19 pages. Finally, the report draws a conclusion with wrapping up the findings. Finally report will state the conclusion in a nutshell with few recommendations to improve ALDIs' processing. For an example, Air Asia, the low cost airline industry giant had implemented this strategy. It renewed its plane to Airbus A380 which provides more than one thousand seats. Course Hero is not sponsored or endorsed by any college or university. The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Passengers felt satisfy for the flight attendance in FireFly due to their friendliness and politeness. Scope of the report 2. In airline industry, customers expect to get good services. Haagen-Dazs focus on ice-cream segment had make the company become the most successful luxury ice-cream company in the decade. iPhone, MacBook, iPad and iPod had make a great impact on innovation of electronic industry. Reflectively, the concept, as proposed by Porter, is a mean of establishing a sustainable competitive advantage over other player in the industry. Air Asia provides lowest price tickets. Focus strategy comprise lower investment in resources and organisations could benefits from the specialisation provided by the organisations. Cost Leadership Strategy 3.2.2. Competitors might get copy the products and eliminate the differentiation. Organisations should have review their strengths and weaknesses and pick the most appropriate strategy according to the business nature. Customer felt satisfy as they could travel in low cost. Firms that implement cost leadership strategy will have high level of productivity and high capacity of utilization. According to Kumar (2010), “Business level strategies are essentially positioning strategies whereby businesses tend to secure for themselves an identity and position in the market.” It is aim to evaluate competitors in order to gain competitive advantage in the industry. A consumer's experience at a Starbucks' location is arguably different that any other coffee shop because of their intimate atmosphere, welcoming environment, and genuine service. In this essay, a request was given by Impala Platinum’s management team that we look into their current business situation. IKEA is the cost leader in the furniture industry. “Strategy is a deliberate search for a plan of action that will develop a business competitive advantage and compound for it.” (Montgomery 2002). This strategy is aim to get cost advantage and become a low cost producer. If cost-leadership strategies can be implemented by numerous firms in an industry, or if no firms face a cost disadvantage in imitating a cost-leadership strategy, then being a cost leader does not generate a sustained competitive advantage for a firm. ALDI’s Integrated Cost Leadership/Differentiation Strategy 3.2.1. Looking for a flexible role? Claims in Strategising: A comparative Study of the ALSI 40 Companies. Organisation that apply focus strategy have limited opportunities to growth as its only focus on narrow scale. Conclusion – Southwest’s Generic Competitive Strategy & Intensive Growth Strategies. A cost leadership strategy works on the basic principle that more the number of units produced, lower will be the unitary cost. 6.1 Introduction; 6.2 Understanding Business-Level Strategy through "Generic Strategies" 6.3 Cost Leadership; 6.4 Differentiation; 6.5 Focused Cost Leadership and Focused Differentation; 6.6 Best-Cost Strategy; 6.7 Stuck in the Middle; 6.8 Conclusion; VII.
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