Advantages of combining overall cost leadership and differentiation in a business with real life examples.
1. High market share – High market share can be attained by implementing a differentiation strategy. Due to a gain in sales volume, the learning curve, economies of scale, and scope, a differentiation strategy can frequently result in a low-cost position. Empirical research also supports the notion that some businesses can excel both at differentiation and low cost. One example is the global TV set industry in which Japanese firms were able to achieve higher quality and lower cost: both at the same time. Toyota Camry, a mid-price car, has been the best-selling car in America for nine of the last ten years. Toyota is also the leading low-cost producer in the global automobile industry (Datta, 2010).
2. Competitive advantage- Some critics claim that cost leadership and differentiation are not mutually exclusive but rather represent a broad continuum and that they may be combined to provide a competitive advantage. For example, a product with high quality yet lower price can achieve competitive advantage in the market. Additionally, an innovative process technology might result in cheaper costs. It can even make goods of greater quality occasionally while costing less. One instance is the development of solid-state technology, which led to improved dependability and cheaper cost in the TV set business. Another example is the mobile phone sector, where process technology increased performance while also lowering costs (Datta, 2010).
3. Enhanced profitability – A corporation can be able to provide a high-quality good or service at a cheaper price by combining cost leadership with differentiation, which may boost sales and market share (Datta, 2010).
Disadvantages of combining overall cost leadership and differentiation in a business with real life examples.
1. Stuck in the middle – Some businesses are unable to successfully implement one of the general strategies. If a company’s prices are too expensive to successfully compete on price, but its features are neither distinctive enough to draw people in, then it is said to be stuck in the middle. It seems like Arby’s is an excellent illustration. For example, the famous roast beef sandwiches from Arby’s, which is a sub company of Wendy’s are neither more affordable than other fast-food sandwiches nor very delicious. Because they don’t have a defined market or competitive pricing, middle-of-the-road companies typically do badly. However, parent company Wendy’s sold Arby’s in 2011 (BCcampus, 2019).
2. Being outmaneuvered by competitors – Due to its position in the centre, the business runs the risk of being overtaken or defeated by competitors that have advanced strategies or abilities. It may also imply that the company’s competitors have outsmarted or outwitted it in a certain circumstance. An example comes from IBM’s personal computer division. Using a differentiation approach, IBM attempted to position their personal computers. Particularly, IBM pledged to provide clients with outstanding service in exchange for charging high costs for their personal computers. Unfortunately for IBM, competitors like Dell were able to offer comparable levels of service while offering PCs for less money. Nothing set IBM’s computers apart from the competition, and the company finally left the industry (BCcampus, 2019).This is discussion forum by another student and i have to reply this with two references.Please answer it
