Stihl is the world’s leading manufacturer and marketer of chain saws with annual

Question

Stihl is the world’s leading manufacturer and marketer of chain saws with annual sales exceeding $3.7 billion. With innovations dating to its 1929 invention of the gasoline-powered chain saw, the company holds more than 1,000 patents related to chain saws and outdoor power tools. The company’s chain saws, leaf blowers, and hedge trimmers sell at price points well above competing brands and are sold only by its network of 40,000 independent dealers in more than 160 countries.

How would you characterize Stihl’s competitive strategy? Should it be classified as a low-cost provider strategy? a differentiation strategy? a best-cost strategy? Also, has the company chosen to focus on a narrow piece of the market or does it appear to pursue a broad market approach? Explain your answer. Please write personal perspective. Please type it up, because hand writing is sometimes hard to understand.

Explanation / Answer

In the given case, Company S is the world’s leading manufacturer and marketer of chain saw. The company’s product such as chain saws, leaf blower and hedge trimmer are sold at price points well above competing brands and are sold only by its network.

Broad Differentiation Strategy: Some of the features of a company who follow broad differentiation strategy are as follows:

• Company covers a broad cross-section of the market.

• Company offers something different from their competitors that attract its buyers.

• Company offer varied products, wide selection and emphasis on differentiating features.

• Company builds a product with differentiating features for which buyers are willing to pay, offer superior products.

• Company charge premium price to cover extra cost of differentiating features.

• Such company stress on innovation to stay ahead of their competitors. Thus, Company S follows Broad differentiation strategy .Company charges premium price to cover the extra cost of differentiating features. It has a varied product line and offer products such as chain saws, leaf blower and hedge trimmer. Company also stress on innovation to stay ahead of its competitors. It also offers its customers different and exclusive products.

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