The Cost Leadership strategy is exactly that – it involves being the leader in terms of cost in your industry or market. Organisations that adopt focus strategy will enjoy a high degree of customer loyalty. Besides that, this strategy is use to foresee changes in demand and technologies. … Determining the Embeddedness of Sustainability. Company overview 3.1. Conclusion Achieving a Cost leadership strategy might not be for every company. Published Date: 23 Mar 2015. After the research about Porter’s Generic Strategy, the writer is more understand about business strategy. A good example for differentiation would be the Coca-Cola Company. Cost leadership are difficult to maintain due to imitation and competition. 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. Conclusion – Southwest’s Generic Competitive Strategy & Intensive Growth Strategies. Passengers felt satisfy for the flight attendance in Air Asia due to their friendliness and politeness. When a firm implements this strategy, the firm can compete with other firms and get higher profits. 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”). This strategy used by businesses to create a low cost of operation within their niche. IKEA is the cost leader in the furniture industry. Customers felt dissatisfy as they have to buy expensive snack in plane even tough in a long flight. Cost Leadership Strategy. Please click this link to view samples of our professional work witten by our professional essay writers. Thus a cost leadership strategy helps create barriers to entry that protect the … 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. The three element are cost leadership strategy, differentiation strategy and focus strategy. Functional Strategy is the level of operating divisions and departments. 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 . Haagen-Dazs focusing on the industry had ensured it to have continuously improvement over years. 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. 3de edition. In addition, targeting either a narrow or broad market helps … Conclusion; References; Appendences; Click here to download the full report: Learning From Leadership: Investigating the Links to Improved Student Learning. Due to the narrow segment focus by the company, the volume of products would be low, therefore the less bargaining power from the suppliers and customers. Focus On Cost Leadership Strategy Management Essay. 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. Corporate Strategy, (2014) Available from: Strategic Management: Developing sustainability in. 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. Customers wish to get low fare tickets. Another company that has differentiation strategy is Apple Inc. Apple Company had made great innovation in electronic industry. Department of Business Management, University, Critical Variables of Business Failure: A review and, Department of Business Management, University of, University of South Africa. 1) THE PROBLEM 1.1.PROBLEM DEFINITION. Management: Study Guide for MNG4801. Chapter 6: Selecting Business-Level Strategies. All of the six strategies designed by porter enlists the interaction between pr… The seats in FireFly airplane are broad and comfortable. FireFly Airline has very low price tickets for customers. Differentiation is needed when there are specific demands from customers. Strategic strength plays an important role in success of a company and is known as strategic necessities such as good quality at low cost. Organisations which apply cost leadership strategy will enjoy a higher average profit from their products. Business processes: Schall, M. S. (1983). All work is written to order. Seats in Air Asia airplane is up straight and is uncomfortable but FireFly airplane seats is broad and comfortable. ALDI’s Integrated Cost Leadership/Differentiation Strategy 3.2.1. It may invite aggressive price-cutting by competitors. Though it started as an online bookstore, its success in its venture spurred it to diversify into selling anything that can be sold online. Similarities and differences between Air Asia and FireFly. The premises of the strategy chosen and the risk, advantages and, disadvantages of the strategy were also mentioned within question one. Customer felt happy as they could travel in low cost. Haagen-Dazs focus on ice-cream segment had make the company become the most successful luxury ice-cream company in the decade. Disclaimer: This essay has been written and submitted by students and is not an example of our work. Conclusion Achieving a Cost leadership strategy might not be for every company. Cost leadership are difficult to maintain due to imitation and competition. As technology improves, competitors may be able to surpass the production capabilities, thus eliminating the competitive advantage of the organisation. The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Risk for this strategy is customers with low loyalty. Passengers felt satisfy as they could have free refreshment on board. It may lead to a price-war that may lead to lower profitability. Thus a cost leadership strategy helps create barriers to entry that protect the firm—and its existing rivals—from new competition. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. It is use to maximize the performance of an organisation in the market. Firms that implement cost leadership strategy will have high level of productivity and high capacity of utilization. The writer had chosen Air Asia Berhad and FireFly Airline as the research companies. … Pretoria. This chapter explains generic business-level strategies that executives select to keep their firms competitive. Cost leadership strategy is vital in business management especially in an industry with stiff competition. This is certainly true for Walmart, for example. Portougal, V., & Sundaram, D. (2005). differentiation strategy since it seemed to have greatest effect on performance as well as try out the other two strategies of cost leadership and focus simultaneously. 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.. The differences between Air Asia and FireFly are Air Asia provides rental cab services but FireFly does not provide the service. Risk for this strategy is customers with low loyalty. 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. It forgoes the economies scale that would be available from larger market. Air Asia had been well known as a low cost producer. Cost leadership is a strategy that having lowest operational cost and lowest prices in the target market segment. Besides that, there is only one FireFly airport. It renewed its plane to Airbus A380 which provides more than one thousand seats. (2005). Air Asia has the lowest fare flight. In most of the airport, there is a long queue at the check-in counters. described from a theoretical perspective. When a firm implements this strategy, the firm can compete with other firms and get higher profits. (Impala Platinum Corporate Website, 2014). In many settings, cost leaders attract a large market share because a large portion of potential customers find paying low prices for goods and services of acceptable quality to be very appealing. During the flight, customers expect the flight attendance to be polite. A communication-rules approach to organizational culture. The second, question of this essay referred to the second case study. Let us examine the implications of each of the three generic strategies. 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. The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest 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. One case study was reviewed. Finally, the report draws a conclusion with wrapping up the findings. Revised edition. Cost Leadership Strategy 3.2.2. Those unique products from Apple had ensured the company becomes the best seller in electronic industry. Customer expectations are the trusts about service delivery that serve is as standards or reference points against which performance is judged. VAT Registration No: 842417633. Conclusion After the research about Porter’s Generic Strategy, the writer is more understand about business strategy. The similarities of Air Asia and FireFly are the both companies had the lowest fare for the customers. Air Asia does not provide refreshment for passengers to cut cost. Company Registration No: 4964706. Haagen-Dazs had experimented, tested and ultimately perfected the world’s finest ice-cream. In applying a focus strategy, the company ideally concentrates on a few target markets to satisfy different groups with specialized needs. Web check-in service for customer would have delighted customers as they do not need to wait in a long queue.