And why do they even do so? Cookies Policy, Woolworths’ Integrated Cost Leadership/Differentiation Strategy, Digital Consumer Involvement and Innovation Dynamics, Mission and Vision as Planning Fundamentals, EFG Amalgamated Company: Physical Assets System, Wal-Mart Stores: Internal Business Process Perspective, Choice Hotels International Inc.’s Profitability, Automaten Technik Baumann Company in the Parking Industry, The Commerce Chamber of Alamogordo: Audience Assessment. This is usually achieved by large scale production which enables the firm to attain economies of scale or by innovating the production process. We recommend that you use your own judgement and consult with your own consultant, lawyer, accountant, or other licensed professional for relevant business decisions. simultaneously be capable of: Being "stuck-in-the-middle" implies that the The Nature of the Focus Cost Leadership Strategy. Description. Warner, A., 2010. Build Why or why not? affected functional areas. Failure to undertake support and primary activities may lead into inefficient implementation of the integrated strategy. 2019, This strategy is especially beneficial in a market where the price is an important factor. The costs of poor quality exceed the costs of developing Figure: Integrative Cost Leadership/ It shows that Woolworths cannot survive with a single business-level strategy in the highly competitive Australian retail sector. Now that we have possessed a good knowledge of cost leadership, let’s move on to achieving it in real life. It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. Hill, C. & Jones, G., 2008. a managers career development tool. On the other hand, to implement its differentiation strategy, firms may be required to improve its marketing and research and development activities. Many Unique New York: John Wiley and Sons. Integrated Cost Leadership/Differentiation. or characteristics that customers value and provide these differentiated The competitive strategy entails both offensive and defensive mechanisms which are aimed at dealing with the five competitive forces (Vallabhaneni, 2009, p. 15). A number of support and primary activities have to be undertaken for the strategy to be effective. Schermerhorn, J., 2010. continuous search for cost reduction without sacrificing acceptable quality Explain your rationale. Manning, A., 2001. The result is that the firms will be able to produce highly differentiated products that add value to the customers. For a firm to effectively adopt the integration strategy, it must be effective in implementing reducing cost and product differentiation. training necessary and management listens to their ideas). Overall, it has been the interplay between innovation and strategy, which has shaped the supermarket industry in Australia (Merrilees & Miller, 2001). generic strategies, ©1999-2011 OpenLearningWorld . different from the rest of the market. A study conducted by researchers revealed a strong correlation between a firm adopting integrated cost and differentiation competitive strategy and attaining above-average returns (Warner, 2010, p.105). Cape Town: Zebra. The main strategies include cost leadership, differentiation strategy, cost focus, broad differentiation, and low cost strategy (Schermerhorn, 2010, p.223). In addition, the company uses technology to manage its supply chain and inventory. Additionally, the firms may be required to undertake acquisitions in an effort to enhance its ability to differentiate itself by increasing its product portfolio. The value of the price is usually higher than the value of the cost. Porter's Generic Strategies with examples 1. If you continue, we will assume that you agree to our Key assumptions upon which total quality