In order to maintain its competitive advantage over time, an organization needs to make a number of strategic decisions. This competitive strategy influences and modifies many activities, including those related to its network of value-creating activities, also known as its value chain.
Suppose that Nebulon Inc., a manufacturer of lighting fixtures, has decided to change its competitive strategy from high-quality differentiation to cost leadership. In an essay, describe how this decision would affect Nebulon’s value chain activities. What would Nebulon do differently after adopting a cost leadership strategy?
INTRODUCTION
Strategic decision-making process creates an impact on value chain activities, and it leads towards the competitive advantage in the competitive market. The change in the strategy is necessary to beat competitors. Based on current value chain activities, the management usually analyzes the market and competitors to make different changes. Currently, Nebulon Inc. contains the differentiation. However, the intention is to convert into the cost leadership (Medium.com).
COST LEADERSHIP STRATEGY & VALUE CHAIN ACTIVITIES
Value chain activities, according to Porter’s value chain analysis tool, are inbound logistics, operations, outbound logistics, marketing & sales, and services. In the high-quality differentiation, the company intends to make products different as compared to competitors regarding quality design, pricing, and servicing. Conversely, when executing the cost leadership strategy, the intention is to become a low-cost producer to come up with low prices for customers in the market. Low-cost operations can help the company attract customers and enhance the visibility of sales (Gleeson).
Inbound Logistics
Through cost leadership, there is a chance to create the value for customers. For Instance, regarding the inbound logistics, the Nebulon Inc. is looking to maintain good relations with different suppliers to enable the efficient flow of raw materials. Being a prominent manufacturer of lighting fixtures, the efficient flow of material sets the base for cost leadership strategy. Thus, it is the first decision that the company is looking to make in this strategic transformation process (Gleeson).
Operations
Moreover, after adopting the cost leadership strategy, the company can operate quite differently. First, the management has to build economies of scale to depict efficient operations. Obviously, the company can adopt new technology to alter the operational process. In this value creation activity, the big advantage that the company can have is high-quality lighting fixtures at low cost. Operations of the company are integrated with the new technology and low-cost measures (Medium.com).
Outbound logistics
Outbound logistics can also be changed through the consideration of low-cost modes of transportation. Comparatively, in the competitive market, customers can become assertive when the company delivers the products rapidly without any disruption. Thus, the management has to think about both, the quality and cost, when choosing an appropriate transportation (Medium.com).
Marketing & Sales
Interestingly, in the marketing process, the management can focus on the targeted advertisement on different media channels, as the purpose is to reduce the cost of marketing. By keeping the cost of the product low, the company has to be cheaper in marketing activities. Social media integration is another option for the company for pursuing competitive and low-cost positioning. Of course, when the customer sees an advertisement, which depicts the low priced outputs, he makes decisions quickly. With the perspective of the company, it can be done immensely. In the sales process, the value can be created through maximizing the sales through lower prices of different lighting fixtures. In the presence of substitutes in the market, the low price of the product is a powerful source for the company to create value. If Nebulon Inc. sustains its quality and keeps all phases efficiently, the business sustainability, profitability, reputation and customer loyalty can be ensured (Gleeson).
Support
The financial support, human resource initiatives, and effective management information system can play vital roles in the execution of cost leadership strategy.
CONCLUSION
In the end, it is to conclude that the company wants to gain the sustainable competitive advantage through cost leadership strategy. Captivatingly, the management considers the income level of customers, and accordingly, derives insights, which are necessary to create the value for customers. Remarkably, the value creation activities can be changed with the passage of the time through strategic thinking or decision-making. In future, the expectations regarding sales, loyalty, satisfaction, and profitability are in the limelight if the Nebulon Inc. determines the efficient operations.
Work Cited
Gleeson, Brent. “How Values-Based Leadership Transforms Organizational Cultures.” Forbes. Forbes, 10 March 2017. Web. 22 January 2018 https://www.forbes.com/sites/brentgleeson/2017/03/10/how-values-based-leadership-transforms-organizational-cultures/#37ed5e841fbd.
Medium.com. “How Cost Leadership Builds powerful Businesses, and Why it Always Matters.” Medium. Medium, 4 May 2015. Web. 22 January 2018. https://medium.com/evergreen-business-weekly/how-cost-leadership-builds-powerful-businesses-and-why-it-always-matters-83685eb1c55e.
+447462439809