Internal and External Analyses Increase Production Capacity and Knowledge
Describe the nature of focused cost leadership and focused differentiation. Know the advantages and disadvantages of focus strategies. Companies that use a cost leadership strategy and those that use a differentiation strategy share one important characteristic: These efforts to appeal to broad markets can be contrasted with strategies that involve targeting a relatively narrow niche of potential customers.
These latter strategies are known as focus strategies Porter, A focused cost leadership strategy requires competing based on price to target a narrow market Table 5.
A firm that follows this strategy does not necessarily charge the lowest prices in the industry. Instead, it charges low prices relative to other firms that compete within the target market.
There are ways to view movies even cheaper, such as through the flat-fee streaming video subscriptions offered by Netflix. But among firms that rent actual DVDs, Redbox offers unparalleled levels of low price and high convenience.
Several examples of firms pursuing a focused cost leadership strategy are illustrated below. This allows the firm to attract customers that might not otherwise be able to afford a restaurant-quality pizza.
The strategy has worked: Providing indoor seating creates expenses for fast-food restaurants. Checkers Drive In keeps its costs low by not offering indoor seating.
Checkers targets drive-thru customers and offers them big burgers at rock-bottom prices.
Another important point is that the nature of the narrow target market varies across firms that use a focused cost leadership strategy. In some cases, the target market is defined by demographics.
Redbox machines are available on university campuses nationwide. In other cases, the target market is defined by the sales channel used to reach customers. Most pizza shops offer sit-down service, delivery, or both. In contrast to most fast-food restaurants, Checkers Drive In is a drive-through-only operation.
To serve customers quickly, each store has two drive-through lanes: These savings allow the firm to offer large burgers at very low prices and still remain profitable. The Nature of the Focused Differentiation Strategy Focused differentiation is the second of two focus strategies.
A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market Table 5.Mar 28, · A big step today for both Nokia and Microsoft in their bid to be at the center of the huge smartphone growth currently underway in China and other emerging markets: Nokia today paired up with.
Cost differentiation Nokia can set an Mobile Operating industry Manufacturer Profits benchmark for Nokia operating profits Apple Pressure on Samsung competitors RIM Cost leadership LG an invincible HTC position against Motorola competitors Sony Ericsson Fight head-on with Apple.
Announces Kathrin Buvac has been nominated as President of Enterprise, commencing January 1, , and remaining on the Nokia Group Leadership Team ; Espoo, Finland - Nokia today announces plans to accelerate progress in its strategic growth areas, further sharpen customer focus, and .
Strategy used by businesses to create a low cost of operation within their niche. The use of this strategy is primarily to gain an advantage over competitors by reducing operation costs below that of . CANDIDATES: BM STRATEGIC MANAGEMENT || 16 Cost Leadership Differentiation Broad BROAD BROAD Target COST LEADERSHIP DIFFERENTIATION Narrow Target NICHE or FOCUSED NICHE or FOCUSED COST LEADERSHIP DIFFERENTIATION Figure 8: Generic Strategies for Competitive Advantage  The goal for Nokia is to improve its .
The Nokia-Microsoft ecosystem will deliver differentiated and innovative products with unrivalled scale in terms of product breadth, geographical reach and brand identity.” (Nokia, about us) Nokia’s mission in the smartphone market is to regain its leadership position.