Studebaker Corporation one of the earliest auto manufacturer

Studebaker Corporation, one of the earliest auto manufacturers, prospered in the late 1940\'s and into the 1950\'s. Its advertising after World War II emphasized quality of design and production. The corporation also used the stability of its work force in its advertisements, often featuring pictures of father and son working side by side in its factories. Required: (a) From just this brief description of Studebaker Corporation, which type of competitive strategy-cost leadership or differentiation,-would you guess Studebaker was using? Explain your choice. (b) Given your answer in Part (a), speculate on what market factors might have caused the corporation to go into bankruptcy and cease production in the mid-1960s.

Solution

ANS.a.:It is Differentiation strategy.

Explanation : Differentiation strategy means differentiating company\'s product or services from that of competitors. Catering customers according to their specific need by providing unique products and services. In this case study , Studebaker Corporation is highly focusing on quality design and production. They are providing quality design which makes them differentiate their product with from their competitors. In cost leadership strategy, the main focus is on reducing the cost of the product or services.Hence, its not a applicable to Studebraker Corporation.

Ans b: The market factors that might have caused the corporation to go in bankruptcy and cease production in the mid-1960s are as follows:

a. Increase in Cost: The company\'s prime focus was in providing quality products to their customer. It can be assumed that huge cost must be invested in upgrading technology, Research and development, Advetisements etc... The company may not be able to control their expenses which may lead to bankruptcy.

b. Increase in competition: Due to increase in competition in automobile sector, the company will be finding it difficult to conquer the market. Competitors may provide new designs at low cost which make them market leaders.

c. Diversification: Company must have focused only on a particular segment due to which sales dropped down. They must have not diversified their product range to different category of customer which can be a reason for decline in sale.