Low-cost leadership strategy – Assignment Example
Low-cost Leadership strategy Low-cost Leadership strategy What are the three activities or capabilitiesa firm should posses to support a low-cost leadership strategy? Please refer to 8.2 word doc. Can you give an example of a company that has done this?
An evaluation of a business formulation strategy requires that in order for a firm to support a low cost leadership strategy, it must be able to posses’ three capabilities in order to accomplish this (Pearce & Robinson, 2012). These activities are as discussed below. First, the firm should have skills and resources that foster cost leader. This requires an access to capital and a sustained capital investment within the business organization. There should be processes put in place that are geared towards engineering and nurturing skills coupled with an intense supervision of labor or technical operations in order to achieve the same as Pearce and Robinson (2012) propose.
The manufacture of products and also the delivery of services should be done in an easy manner to foster cost production as well as achieving a low cost distribution system (Pearce & Robinson, 2012). This aims at cutting down the expenditure and hence foster cost leadership strategies to a business. Second, a firm needs to have an organizational requirement that can support and sustain cost leadership activities. The need to have a tight cost control with detailed and frequent control reports is necessary for transparency and accountability in all the business activities (Pearce & Robinson, 2012). The continuous improvement and benchmarking a business with other established business to help it structure its organizations and responsibilities.
According to Pearce and Robinson (2012), there should also be an incentive based meeting that is strictly organized by different departments within the organization which is geared towards aiming at quantitative targets that are set. Third, the business should strive to achieve a competitive advantage in order to posses cost leadership strategy. In this activity, most importantly there should be technological development (Pearce & Robinson, 2012). This is achieved by innovativeness and redesigning of the products. It is also achieved by employing the right human resource management through safety training of all employees and reducing absenteeism. In addition, general administration need to be put in that allows an integrated information system that reduces errors and administration cost. An example of company that has considered these three activities is Harvard business school press.
2. What are the three activities or capabilities a firm should posses to support a differentiation-based strategy? Can you give an example of a company that has done this?
During an evaluation of business differentiation opportunities, three activities are important to be possessed by a business in order to support differentiation-based strategies. The first, the business should have skills and resources that will foster differentiation. This is achieved by having strong marketing abilities (Pearce & Robinson, 2012). To attain this, products need to be engineered by redesigning it in various ways thereby creating talents and flair. The business needs to be capable in basic research to help when business is collecting information such as on market and consumer tastes (Pearce & Robinson, 2012). There should be strong cooperation from suppliers, channels from other established business organization.
Secondly, as asserted by Pearce and Robinson (2012), there should be organization requirements that support and sustain differentiation activities through strong coordination among functions of various business departments. Subjective measurement and incentives should be preferred rather than quantitative measures. Construction of social amenities should be done to attract highly skilled labor, scientist and creative people to the business (Pearce & Robinson, 2012). Also importantly, business should make close friends with key customers to achieve a good market potential.
Thirdly, the business has a number of ways of achieving competitive advantage through differentiation (Pearce & Robinson, 2012). This is done via technological development by using a cutting edge production technology that gives products a distinct image in the market. The business should develop programs capable of ensuring technical competence and service personnel through the use of available human resource management. Moreover, there is need for the organization to develop customized or personalized databases, which have the capacity and capability of building knowledge of both group and individual customers on the basis of general administration (Pearce & Robinson, 2012). Finally, the businesses need to maintain quality control by key suppliers to facilitate new product development activities through procurement. An example of a company that has possessed these capabilities for business differentiation strategies is Harvard business school press.
Pearce, J., & Robinson, R. (2012). Strategic management: Planning for domestic & global competition. McGraw Hill.