Ryanair, Wal-Mart, Timex, Casio, and Hyundai are all cited as examples of firms
ID: 350800 • Letter: R
Question
Ryanair, Wal-Mart, Timex, Casio, and Hyundai are all cited as examples of firms pursuing cost-leadership strategies, but these firms make substantial investments in advertising, which seems more likely to be associated with a product-differentiation strategy. Are these firms really pursuing a cost-leadership strategy, or are they pursuing a product-differentiation strategy by emphasizing their lower costs? Instructions Write a paper addressing the nature of product differentiation within a cost leadership strategy. Your paper should be 300+ words in length.
Explanation / Answer
Though the companies cited, focus on cost leadership strategy by reducing cost through bulk purchasing, use of technology, economy of scale in production, using techniques like JIT to manage lean inventories, using advanced production and distribution techniques to provide no frills products and services at very competitive price, beating the competition, they also manage to create unique value preposition to the customers by offering the products that are way different from the competitive products, thereby successfully implementing both strategies at a time.
For example, Hyundai is known for its reliable, value for money, no frills and efficient cars offered at competitive prices, but also creating unique value for the customer by offering them technologically advanced, easy to operate and maintain car that is much better than the similarly priced options of the competition . Same is with Wall Mart which has its everyday low price model of passing on the cost savings to the customers, but at the same time offering uniquely fresh fruits, vegetables and meats and dairy products straight out of farm, offering distinguished differentiation with competitors.
The phenomenon can be termed as a mixed strategy where the organisation sells the product at lowest price, yet beating the competition on quality and value for customers, because of a robust quality and cost effectiveness in place.
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