Check english grammar - Essay Example

The business objectives that are covered in a business strategy should be to differentiate from competitors and satisfy needs through creating additional value by providing exceptional customer service. There are few ways to create added value for customers such as: (1) To create value for customers by offering products or services that are differentiated from competitors and have unique features or characteristics (2) By offering products and services at lower prices than competitors (3) A hybrid option, which is a combination of the first two methods, and is otherwise known as the best-cost strategy.

There are four generic strategic plans: Differentiation Low-cost leadership Best-cost Focus Differentiation A differentiation strategy can be carried out simply by creating unique value for customers. This can be done by providing unique or high-quality products or services to the customer, for which they will pay a premium price in return. The uniqueness of goods and services should attempt to provide product innovation, high quality, superior service, and strong supply chain relationships.

Also, an important requirement for achieving success in a differentiation strategy is price; the customers should be paying more than the company spent on creating and producing goods and services. Examples of differentiation strategy: Mercedes cars or Apple computers. On the other hand, a company cannot set prices for its goods and services that are higher than its competitors. The prices of goods and services should be carefully managed in the market; a customer should be willing to pay a higher price for unique products, but it has to be affordable when compared to the quality of those products and services.

Low Cost Leadership A low cost leadership strategy is an integrated set of actions to become the lowest cost provider of products and services for customers in the market when compared to potential competitors. “A strategy in which an organization attempts to gain a competitive advantage by reducing its cost below competing firms.” http://books.google.com/books?id=eYTSWDjMHuYC&pg=PA72&dq=low-cost+leadership+strategy&hl=en&ei=nRtfTqKGNszrrQfb7JyrDw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CC0Q6AEwADgK#v=onepage&q=low-cost%20leadership%20strategy&f=false By keeping production processes low, a company is able to sell its products at low prices and still achieve a profit.

Examples of low cost leadership strategy: Nissan or Wal-Mart. Organizations need to develop one or more of the following factors to fully understand how a low cost leadership strategy can be achieved within an organization: High-Capacity Utilizations: The market demand is high and the capacity of the firm responds to this by increasing floor space, employees, or equipment. This will result in fixed costs covering more units, which lowers per unit cost (suitable for hospitals, retail stores, and software developers).

Economies of Scale: Refers to using huge physical assets to lower unit production costs. An example of this concept is the cost of building two hospitals. The cost of building a 300-bed hospital should not be twice the cost of constructing a 150-bed hospital, all the other things held equal, so the initial fixed cost per unit of the capacity will be lower. Technological Advances: Investing in technology results in a firm saving on production costs. Some examples of this concept are Internet banking, Wal-Mart’s automated distribution systems and ordering and warehouse systems, and the reservation systems of major airlines.

Effects of Experience: Experienced employees can perform the same job tasks but do so quicker. For example, a 10 percent reduction in processing time may be achieved.