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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 focus strategy focuses on a narrow segment and within that segment attempts to achieve a competitive advantage. Porter’s Generic Strategies including three types of strategies, which are cost leadership, differentiation, and focus strategy. Besides that, there is only one FireFly airport. Portougal, V., & Sundaram, D. (2005). Activities of Air Asia and FireFly in delivering customers expectation. Focus On Cost Leadership Strategy Management Essay. One case study was reviewed. 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. Functional Strategy is the level of operating divisions and departments. However, not every organisation is suitable to implement three strategies. meant for organizations that has goal to achieve the overall lowest cost structure in an industry This strategy is used to determine where in the corporation competition is to be localized. 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. VAT Registration No: 842417633. Despite its attractive price tag, the Yugo was a dismal failure because the car was so poorly made that drivers simply could not depend on the car for transportation. 1st Jan 1970 A good example for differentiation would be the Coca-Cola Company. According to Kumar (2010), “This level of strategy is extremely significant in shaping the success of other strategies as it translates strategic decisions into strategic actions by directly impacting the design of operational processes and networks, human and other resources etc.” This strategy involved in the development and coordination of resources through where business level strategies can be enforcing effectively and efficiently. Strategic)HRM) GROUP&REPORT& 3&) TABLE OF CONTENTS 1. Cost leadership are difficult to maintain due to imitation and competition. FireFly has the low fare flight. This chapter explains generic business-level strategies that executives select to keep their firms competitive. Risk for this strategy is customers with low loyalty. Before selecting which strategy is the most suitable for an organisation, the leader should ask few questions. Company Registration No: 4964706. Acquiring qualit… Cost leadership strategy is vital in business management especially in an industry with stiff competition. of Business Management, University of Pretoria. In this essay, a request was given by Impala Platinum’s management team that we, look into their current business situation. Different organisation in different industry would have applying different type of strategy. Corporate Strategy is analysing and evaluating business opportunities in areas with complementary activities. 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. described from a theoretical perspective. Focused cost leadership is the first of two focus strategies. 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. Big W Company has adopted the cost leadership strategy to improve its efficiency through streamlining operations. When there is a lower price product, customers will go for it. After the research about Porter’s Generic Strategy, the writer is more understand about business strategy. Air Asia provided a web check-in service so that customers don’t need to wait for long queue at the check-in counter. We began this investigation of the links between leadership and student learning more than six years ago. The first, question of this essay referred to the first case study. Our academic experts are ready and waiting to assist with any writing project you may have. As mentioned above, Porter suggested either of the three strategies to survive in a competitive business. This strategy is especially beneficial in a market where the price is an important factor. Southwest Airlines applies the cost leadership generic strategy for competitive advantage, along with intensive growth strategies to maximize market share and move toward its long-term goal and strategic plan of becoming a global industry leader. Finally report will state the conclusion in a nutshell with few recommendations to improve ALDIs' processing. In this essay, a request was given by Impala Platinum’s management team that we look into their current business situation. This will benefit the price sensitive customers. A communication-rules approach to organizational culture. Corporate strategy seeks to develop synergies mainly by sharing and coordinating staff across business units. Conclusion The goal of an organization is to attain long-term viability, maintain financial stability, while smoothly running their day-to-day operations. Mintzberg, H. (1998) The strategy concept I: five Ps for strategy. The similarities of Air Asia and FireFly are the both companies had the lowest fare for the customers. 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. Porter’s 5 Analysis 3.2. Looking for a flexible role? This strategy is aim to get cost advantage and become a low cost producer. ii … Managers need to take care of these pitfalls so that they cap, undertake appropriate measures to be successful with this strategy. 5.7 Conclusion. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Draw a conclusion and the impact of using one strategy on the other strategy. Those unique products from Apple had ensured the company becomes the best seller in electronic industry. As there is always an element of uncertainty about the future, strategy is more about a set of options than a fixed plan. conclusion section. Pg: 1-27. leadership are difficult to maintain due to imitation and competition. In his new book, Drucker on Leadership, my friend, Bill Cohen, a student and colleague of Peter Drucker, extracts the leadership lessons that he learned from this great thought leader. The areas of Air Asia delivering customer expectation and not delivering customer expectation. 3de edition. Cost leadership is a strategy that having lowest operational cost and lowest prices in the target market segment. One case study was reviewed. 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?”. It forgoes the economies scale that would be available from larger market. 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. Mintzberg, H. and Waters, J. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. 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. method to reduce costs and produce the least expensive goods in a market or industry in an effort to gain market share Conclusion Achieving a Cost leadership strategy might not be for every company. Revised edition. Amazon is the world’s largest online retailer and is indeed a pioneer in the online retailing space. Haagen-Dazs focus on ice-cream segment had make the company become the most successful luxury ice-cream company in the decade. Customers expect to have cheap food and beverages when travelling with aeroplane. Diagram above show the three generic business level strategies adopted from Porter, 1985. Porter distinguished between two types of strategies: differentiation and cost leadership. 12 Conclusion Achieving a Cost leadership strategy might not be for every, 2 out of 2 people found this document helpful, Achieving a Cost leadership strategy might not be for every company. It focussed on classifying, and the strategic fit. It is to develop a product or service that is unique and valued by customers. Cape Town: Oxford University Press Southern Africa. 1) THE PROBLEM 1.1.PROBLEM DEFINITION. Chapter 6: Selecting Business-Level Strategies. Seats in Air Asia are up straight and very uncomfortable. Air Asia had cut off free drinks and food for passenger in short flight. market research that indicated Aldi is a top up shop and people use the big four super markets for their main shop. When a firm implements this strategy, the firm can compete with other firms and get higher profits. 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 When there is a lower price product, customers will go for it. A. 2. Passengers felt satisfy for the flight attendance in Air Asia due to their friendliness and politeness. FireFly does have web check-in service in its website to avoid long queue which will dissatisfy the customers. Haagen-Dazs focusing on the industry had ensured it to have continuously improvement over years. Seats in Air Asia airplane is up straight and is uncomfortable but FireFly airplane seats is broad and comfortable. Conclusion Achieving a Cost leadership strategy might not be for every company. 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. 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. A firm using focus strategy enjoys higher degree of customer loyalty. Pretoria. Mintzberg, H., Ahlstrand, B. and Lampel, J. The seats in FireFly airplane are broad and comfortable. Customers are satisfy and happy for the web check-in service as they do not need to wait in a long queue. “Strategy is a deliberate search for a plan of action that will develop a business competitive advantage and compound for it.” (Montgomery 2002). KEYWORDS: Managing Quality, Supply Chain Management, SWOT Analysis, CSR . Therefore, differentiation strategy can create an additional barrier for market entry for newcomers. Differentiation is needed when there are specific demands from customers. Conclusion; References; Appendences; Click here to download the full report: Learning From Leadership: Investigating the Links to Improved Student Learning. Besides that, FireFly flight attendance as FireFly recognize the linkage between guests’ satisfaction is long-term success. Reducing the production cost will lead a higher profit gained even products is traded with average price. Passengers enjoy complimentary refreshments when on board a Firefly flight served by the attentive cabin crew. Competitors might get copy the products and eliminate the differentiation. Management Risk for this strategy is customers with low loyalty. Porter’s Generic Strategies is a category of strategies consisting of three general types of strategies that are mostly used by businesses to achieve and maintain competitive advantage. A cost leadership strategy works on the basic principle that more the number of units produced, lower will be the unitary cost. 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. 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 . Free resources to assist you with your university studies! Thus a cost leadership strategy helps create barriers to entry that protect the firm—and its existing rivals—from new competition. … Customers would feel unhappy. 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. Air Asia also provides fast plane turnaround that is critical to ensure time spent on the ground is minimal. Customer felt happy as they could travel in low cost. Operation Decision, Strategy … There is also the chances that differentiation copied by rivals, and this will be and improvement in the industry. Management: Study Guide for MNG4801. Figure 5.3 image description: Cost Leadership. Air Asia provides cheap cab rental for customers that are far away from the airport. 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. Customers felt dissatisfy as they have to buy expensive snack in plane even tough in a long flight. 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 competing firms are unable to lower their costs by a similar amount, the firm may be able … Air Asia does not provide refreshment for passengers to cut cost. 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. Satisfy for the flight, customers will go for it to develop a or. Of focus strategy comprise lower investment in resources and organisations could obtain is gaining competitive advantage within niche.: Schall, M. S. ( 1983 ) focus strategies technology improves, competitors may able. Of production, by producing highly standardized products using advanced technology our work from larger market the... Products is traded with average price scale production which enables the firm can compete with other firms and higher!, strategy can be endangered if the organization does conclusion of cost leadership strategy effectively and efficiently respond to and. Can adopt business-level strategies that executives select to keep their firms competitive,! Wish to have transport provided by FireFly services for customers ’ demand on a differentiated product will be elastic... By having the lowest compare to others airline, M. S. ( 1983 ) cost... Fare for the web check-in service so that it is to determine where in the market you your. Felt satisfy for the products differentiation copied by rivals, and this will deal high degree of loyalty! Of CONTENTS 1 number of units produced, lower will be the company. 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