Explain how a company can have a successful business strateg

Explain how a company can have a successful business strategy based on both the cost leadership and differentiation strategies.

4.    Evaluate the differences between cooperative and competitive strategies. Given specific examples of each type in your analysis.

Solution

Cost leadership means that the company has lowest cost of operation in the industry and as a result offers its products at a very competitive prices to the consumers.

A differentiation strategy aims at offering unique products for different customer segments.

A company can have a successful business strategy based on both the cost leadership and differentiation strategies. Cost leadership will help it to take advantage of economies of scale. The efficency thus achieved can be utilized to develop unique products. Differentiation strategy requires heavy spending in the form of advertising and the firm can sustain this spending due to the cost reduction achieved through cost leadership.

4. A cooperative strategy is a strategy where firms cooperate and combine few of their resources to create sustainable competitive advantages. Example - Sony and Ericsson combining few of their resources to form Sony Ericsson, a compnay operating in the mobile handset market.

Competitive strategy, on the other hand, is a strategy that helps a firm outperform its competitors. Example - Rolls Royce follows a competitive strategy of focusing on a market niche. It sells only high end, luxury, custom made cars.