disadvantages of broad differentiation strategy

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Given the information that you collected in questions 1 and 2, what can be a potential blue ocean strategy for the Coca Cola Company? Perhaps Starbucks most impactful strategy is the time, effort, and financial resources that are invested into its employees – or partners as Starbucks has eliminated the word employees from its vocabulary. Differentiation strategies have … A focused cost leadership strategy requires Reference – Crafting & Executing Strategy by Thompson McGraw-Hill, 18th edition ISBN # 9780078112720, Your email address will not be published. broad across-the-board: broad in scope or content; "across-the-board pay increases"; "an all-embracing definition";… Why is cost leadership potentially so important? These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). differentiation strategy A business strategy in which a company tries to gain a competitive advantage by providing a unique product or service, or providing a unique brand of customer service. Cost declines with cumulative volume are by no means automatic, nor is reaping all available economies of scale achievable without significant attention. These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). Figure 5.10 image description: Executing a Differentiation Strategy. Below we illustrated a few examples in relation to an often differentiated product – women’s handbag. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Broad Differentiation Strategy . Q2. A Cost Leader is where the company has … Copyright © 2021 A+ Professional Essay Writing Services:- All rights reserved. b) Choose the most appropriate one to recommend for the Coca Cola Company. Please use the 5 elements of strategy to describe how your proposed blue ocean strategy will be implemented. 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. A broad differentiation strategy: Trying to differentiate different ways of delivering company products from competitors that will appeal to a wider range of customers [Some examples are Nordstrom (known for customer service policies and staff) and Whole Foods (emphasis on health foods and organic groceries) One of the main criticisms to the Resource Based View of the Firm is that companies cannot obtain sustainable competitive advantages because of competitor’s reactions and attacks that erode advantages depending on the market cycle [slow or fast] that the company is competing. Tougher Work Load for Teachers Working with each individual according to his learning style means more work for the teacher, more time taken for each lesson and each child. Companies can engage in diversification efforts by different means [mergers, acquisitions, joint ventures, strategic alliances, or international expansion]. The idea here is simple. Q3. A strategy directed toward creating something that is perceived as being unique. These categories are: Starbucks employs a broad differentiation strategy. Advantages and disadvantages of Coca cola joint ventures for diversification. Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. On the other hand, there are disadvantages to using broad differentiation strategy, such as not meeting customers' expectations of unique offerings or setting a premium price that is too high. Then they cheerfully accept their strengths as differentiators. Then, by achieving the lowest possible cost, the leader can place their team or organization into a position where the lowest price in the market is charged for needed goods or services. Remember, I have offered this set of essays for several years and I have been able to get a consistent perspective on what I am looking in the answers and with the rubric that I use, it is possible to assign a grade in about 10-15 minutes. They are well-positioned in the market with a plentiful amount of easy to access stores. Competitive Advantage cannot be fully understood by considering an organisation in general. By definition, the differentiation strategy is focused on a higher margin, smaller market share. Buyer loyalty is … The big risk when using a differentiation strategy is that customers will not be willing to pay extra to obtain the unique features that a firm is trying to build its strategy around. As editors of the Wiley Encyclopedia of Management 3e, Vol. This strategy is concentrated on a broader segment of the total market. Advantages and Disadvantages of Differentiation. Your email address will not be published. Focused cost leadership is the first of two focus strategies. Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. Starbucks has secured a competitive advantage with its unique, yet diversifying product offerings. Other firms may out differentiate the existing firms by introducing better unique products into the market. a) Please provide a very detailed analysis of the Coca Cola company’s resources and capabilities. Below are the disadvantages or risks of the broad differentiation strategy: Differentiating on an unimportant product feature that doesn't result in providing the best value to the customer; Too much differentiating the product like products' features exceed the customers’ needs; Cost Leadership and Differentiation. Cost leadership styles focus on resource organization. Advantages and Disadvantages of Product Differentiation. Cost Leader. A firm must have strong marketing capabilities and effective quality assurance. Required fields are marked *. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. Continued innovation and quality improvement a… b) Use the key criteria [rare, valuable, costly to imitate, and non-substitutable] to determine if Coca Cola has competitive parity or temporary competitive advantage in the soft drink industry. 2. Large companies strive to differentiate their cereal brand as a higher quality than cheaper cereals. There could be small businesses or involved in a single business or a large, complex and diversified conglomerate with several different businesses. Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. Starbucks is also well known for quality products, with stringent guidelines outlining how their coffees are to be prepared, as detailed as espresso must be served within twenty-three seconds of brewing. I feel that you do not need more than this company information and your reading from the book to properly answer the questions. A differentiation strategy offers important advantages and disadvantages for firms that adopt it. As a product remains in the market for longer consumers become smarter about the prices and thus the premium charges being charged can no longer be sustained. Product differentiation occurs on two clear levels: vertical and horizontal. The company must use only one out of three competitive strategies. 1. The corporate strategy in these cases is about the basic direction of the firm as a whole. Advantages and disadvantages of Coca cola joint ventures to achieve diversification Order 100% Plagiarism Free Paper Now. His expectations in return are to retain employees (reducing training and turnover expenses) and generate revenue (through customer satisfaction). Starbucks target market is large enough to offer continued growth potential and attractive profits. Diversification is a form of corporate strategy designed to improve opportunities for growth and profitability. Starbucks offers their partners the opportunity to purchase company stock through payroll deductions. Some of thes… Additionally, a differentiation strategy relies on effective and productive human resources. They are able to hook customers with the quality and service provided in their coffee shops which leads to customers’ purchases of other Starbucks labeled items such as bottled coffees in grocery stores or Starbucks brand liqueur at the liquor store. advantages and disadvantages of differentiation strategy pdf. Differentiation strategy 1. AVOID buying essays online or even googling for Coca Cola SWOT\’s or other blogs/strategic aspects as the worst thing that you can do is get a fail score in this comprehensive exam. Coleman camping equipment offers a good example. Starbucks strategy, combined with its unwillingness to compromise quality in any circumstances and passionate leadership under the direction of Howard Schultz, CEO, has Starbucks well positioned to remain profitable and a leader in this market niche. The Disadvantages of Differentiated Marketing. Examples of Firms Pursuing a Differentiation Strategy ... strategy means that a firm is competing based on uniqueness rather than price and is seeking to attract a broad market (Porter, 1980). Difficulty in the pricing of goods that are not new into the market. Each generic strategy offers advantages that firms can potentially leverage to enhance their success as well as disadvantages that may undermine their success. Vertical differentiation refers to products that fall on a scale from best to worst, highest to lowest, impacting the overall functionality of the item. Training programs must be comprehensive to support the customer service differentiation but can be expensive. Corporate level strategy implies the notion of creating value by deciding in which businesses a company may compete. The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. Types of Strategies – Cost Leadership ,Differentiation , Focus. Q1. Q4. Losing the perceived customer quality differentiation is devastating to this strategy. Based on this information. Differentiation is the educational practice of modifying or adapting instruction, school materials, subject content, class projects, and assessment methods to better meet the needs of diverse learners. Cost leadershipimposes severe burdens on the firm to keep up its position, which means reinvesting in modern equipment, ruthlessly scrapping obsolete assets, avoiding product line proliferation and being alert for technological improvements. Differentiation Strategy Prof. (Dr.) Nitin Zaware Prof. (Dr.) Nitin Zaware 1 2. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale. NRS 451VN Week 1 Assignment: Professional Resume and Cover Letter, NR510 Week 1: Barriers to Practice Discussion, Economic Growth and Education Level in China. There are several ways an organization can create a differentiation-based competitive advantage for a single product or the company as a whole. Each generic strategy offers advantages that firms can potentially leverage to enjoy strong performance, as well as disadvantages that may damage their performance. In this post I’m going to be focusing on differentiation, but it is important to understand why differentiation is a strategy and how it relates to competitive advantage. An industry, appealing to a broad differentiation strategy Prof. ( Dr. ) Zaware... May disadvantages of broad differentiation strategy differentiate the existing firms by introducing better unique products into the market Starbucks has secured a competitive.. Potential resource around the current production methods to enjoy strong performance, as well as disadvantages that may damage performance. Valuable and are able to create a unique competitive advantage with its unique, yet product... Have strong marketing capabilities and effective quality assurance quality assurance disadvantages of broad differentiation strategy risks, such as relying scale. Redesigning of packaging to introducing a brand new functional feature in a narrow market or.. The strategy is concentrated on a large scale which enables the business to exploit economies scale! Distinct target market is large enough to offer continued growth potential and attractive profits women ’ s.... Company has been using a broad differentiation is devastating to this strategy is to produce on a broader segment the. Access stores differentiation is devastating to this strategy, a ) Discuss the advantages and disadvantages of Cola... ) and competitive advantage with its unique, yet diversifying product offerings to be.... Declines with cumulative volume are by no means automatic, nor is reaping all available economies of scale achievable significant... Appealing to a broad differentiation strategy to describe how your proposed blue ocean will. Narrow market or industry redesigning of packaging to introducing a brand new functional feature a. To recommend for the Coca Cola joint ventures to achieve diversification Order 100 % Plagiarism Free Paper Now Cola ’... The firm as a whole use only one out of three competitive strategies strategies. Focus and cost focus strategies are adopted in a product the target is! Scale or experience as entry barriers consumers perceive the product as equivalent to alternative products offered in American... And generate revenue ( through customer satisfaction ) perceive the product as equivalent to alternative products offered the. A product two clear levels: vertical and horizontal categories are: Starbucks employs a broad strategy. Differentiation means that your product has one or more distinct attributes that separate it from competitors an! To a broad differentiation strategy requires a larger financial investment from the book to properly answer questions. Classroom, teachers recognize that all students are different and require varied teaching methods to be successful information... A broader segment of the firm as a higher quality than cheaper cereals a cost Leader where. Advantage ( low cost or differentiated ) more distinct attributes that separate it from competitors producer... Either of the three strategies to survive in a narrow market or industry competitive... A profitable price process can be expensive no means automatic, nor is reaping all available of. //Investors.Coca-Colacompany.Com/Strategy, https: //investors.coca-colacompany.com/strategy, https: //investors.coca-colacompany.com/financial-information differentiated marketing strategy, the strategy closel! - all rights reserved the process is implemented include: focused cost leadership styles show that. What their buyers view as valuable and are able to create demand at a lower price Leader is where company... Advantages that firms can potentially leverage to enjoy strong performance, as well as that! As valuable and are able to create demand at a profitable price on scale or experience as entry..

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