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edu/7367341/googles_strategy_2012
Business Strategies
Generic Strategies
Cost Leadership
The traditional method to achieve this objective is to produce on a large scale which enables the
business to exploit economies of scale.
The strategy is usually associated with large-scale businesses offering “standard” products with
relatively little differentiation that are readily acceptable to the majority of customers. Occasionally,
a low-cost leader will also discount its product to maximize sales, particularly if it has a significant
cost advantage over the competition and, in doing so, it can further increase its market share.
A strategy of costs leadership requires close cooperation between all the functional areas of a
business.
Differentiation
Objective: Provide products that are clearly different from the competitors.
This strategy is usually associated with changing a premium price for the product – often to reflect
the higher production cost and extra value-added features provided for the consumer.
- Strong marketing abilities – need to communicate and convince customers that your product
is superior than the competitor’s
- Product engineering
- Creativity and Innovation – consistently improve your product
- Building strong brand reputation
- Subjective measurements
- Require highly skilled labor and scientists
BUT! You can’t be in the middle. It’s impossible to offer luxury product with lower price (you end up
getting low return + cause confusion to customers)
DUO Strategies: Starts with low cost gain revenue then start differentiation
Speed Differentiation
- Process engineering skills – you need most efficient process to be the quickest
- Excellence inbound and outbound logistics – warehouse close to distribution sites
- Strong delegation – you have to trust your people, not much room for discussion with top
management
Example: Zara speed in terms of clothing lines, every 2-3 weeks they offer new clothes