Describe the circumstances under which a firm chooses a low-cost strategy to attain sustainable competitive advantage. What about the situations when a differentiation strategy is chosen? Provide specific real-world examples. You may research the current events websites listed in the recommended resources for ideas of real-world examples.
Low-cost strategy to attain a sustainable competitive advantage
Different organizations are using the low-cost strategy to gain and sustain the sustainable competitive advantage. Under specific circumstances, the firm uses this strategy to make the difference. For Instance, in the retail industry, there are many new arrivals, which are integrated with the different online platforms. These online platforms for retail chains have made the retail industry more competitive. Online retailers that are using Brick and Motor business model have to think bigger to tackle this challenge. Thus, retail companies have to contain a low-cost strategy to come up with low prices for customers. It enhances the attraction and shapes the buying behavior of customers in the competitive retail industry. The low-cost strategy indicates the low-cost production and sales, and it effectively justifies the purpose. Wal-Mart is using the low-cost strategy to beat online rivals such as Amazon. The pertinent example is “Every day Low Prices’, as it indicates the low-cost approach to get an edge over top retail rival (Lee, 2013).
Situations when a differentiation strategy is chosen
The differentiation strategy can be executed by the company in a competitive situation. For Instance, the competitive situation usually occurs when competitors start imitating different products and services. To eliminate this challenge, the firm may adopt different differentiated traits such as attractive designing, additional features, and price. For example, Starbucks contains a broad product differentiation strategy. It is the biggest factor regarding the sustainable competitive advantage over various coffee rivals. The company diversifies product offerings for customers that have never been offered by other companies in the coffee industry. Starbucks brand liqueur is a prominent example, as it increases customer assertiveness and shapes positive buying behavior (Chin, 2018).
In the end, it is to conclude that firms adopt low cost and differentiation strategies in different situations. The sustainable competitive advantage leads towards long-term business sustainability.
References
Chin, K. (2018, March 8). Walmart is doubling down on its ‘Every Day Low Price’ strategy — and that proves it still has an edge (WMT). Retrieved from https://markets.businessinsider.com/news/stocks/walmart-stock-price-renewed-focus-on-what-its-best-known-for-proves-it-still-has-its-edge-2018-3-1018430717
Lee, S. (2013, October 12). Starbucks – Pursues a Broad Differentiation Strategy. Retrieved from http://amandahaleonline.com/2013/10/12/starbucks-focused-differentiation-strateg/
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