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disadvantages of broad differentiation strategy

2. Figure 5.10 image description: Executing a Differentiation Strategy. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. Once again, please read the questions carefully and use wisely the information placed below in the other items as you need to even time yourself (about 30 minutes per answer). Competitive Strategy is about applying offensive or alternatively defensive actions to create a advantageous position within marketplace, with a purpose to deal with issues effectively with competitive forces in addition to come up with a much better return on investment.. Consider cereal. b) Choose the most appropriate one to recommend for the Coca Cola Company. As mentioned above, Porter suggested either of the three strategies to survive in a competitive business. Differentiation strategies have … Vertical differentiation refers to products that fall on a scale from best to worst, highest to lowest, impacting the overall functionality of the item. They have done the trusty old SWOT analysis and listed their strengths and weaknesses. A differentiation strategy offers important advantages and disadvantages for firms that adopt it. There are several ways an organization can create a differentiation-based competitive advantage for a single product or the company as a whole. Advantages and disadvantages of Coca cola joint ventures to achieve diversification Order 100% Plagiarism Free Paper Now. broad across-the-board: broad in scope or content; "across-the-board pay increases"; "an all-embracing definition";… Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. I feel that you do not need more than this company information and your reading from the book to properly answer the questions. 1. The advantages and disadvantages of the cost leadership styles show us that this process can be used to create a unique competitive advantage. Despite the stagnant growth in the industry, its leading brand, Coke, remains the market leader and it can be considere8i9d as a cash cow for the company. Product differentiation is economically advantageous to a company. There are essentially two factors that identify competitive strategies. The company must use only one out of three competitive strategies. Cost leadership styles focus on resource organization. 3. The corporate strategy in these cases is about the basic direction of the firm as a whole. These categories are: Starbucks employs a broad differentiation strategy. Differentiation Strategy Prof. (Dr.) Nitin Zaware Prof. (Dr.) Nitin Zaware 1 2. The differentiation strategy is closel AVOID buying essays online or even googling for Coca Cola SWOT\’s or other blogs/strategic aspects as the worst thing that you can do is get a fail score in this comprehensive exam. Starbucks offers their partners the opportunity to purchase company stock through payroll deductions. In this post I’m going to be focusing on differentiation, but it is important to understand why differentiation is a strategy and how it relates to competitive advantage. A Cost Leader is where the company has … Some of thes… Cost Leadership and Differentiation. This will help the company to survive and minimize the risk, but if the company does not choose one of three competitive strategies, then there would be a loss of resources. Starbucks has made the organization well-known for tailoring to broad customers’ needs by preparing orders to meet customers’ wishes, no matter how detailed they are. Below we illustrated a few examples in relation to an often differentiated product – women’s handbag. A broad differentiation strategy: Trying to differentiate different ways of delivering company products from competitors that will appeal to a wider range of customers [Some examples are Nordstrom (known for customer service policies and staff) and Whole Foods (emphasis on health foods and organic groceries) If the achieved selling price can at least equal (o… A focused cost leadership strategy requires Tougher Work Load for Teachers Working with each individual according to his learning style means more work for the teacher, more time taken for each lesson and each child. Please do the following, a) Discuss all the General Segments of the Environment and the Five Forces Model to analyze the external conditions affecting the Coca Cola Co in the US market. Schultz’s strategy is to keep Starbucks’ partners happy and passionate about their work through compensation, benefits, and company culture. Cost leadership strategyis vulnerable to the risks, such as relying on scale or experience as entry barriers. b) Provide a summary of potential opportunities and threats to the Coca Cola Company as the current CEO will use your analysis to develop a new strategic management process for the company’s operations in the US. Other firms may out differentiate the existing firms by introducing better unique products into the market. Q2. Difficulty in the pricing of goods that are not new into the market. His expectations in return are to retain employees (reducing training and turnover expenses) and generate revenue (through customer satisfaction). Additionally, a differentiation strategy relies on effective and productive human resources. 1. Please use the 5 elements of strategy to describe how your proposed blue ocean strategy will be implemented. One weakness of using a differentiation strategy involves the challenge of changing the customer perception. They accommodate what their buyers view as valuable and are able to create demand at a profitable price. Q4. This strategy is concentrated on a broader segment of the total market. The big risk when using a differentiation strategy is that customers will not be willing to pay extra to obtain the unique features that a firm is trying to build its strategy around. Coleman camping equipment offers a good example. A strategy directed toward creating something that is perceived as being unique. To successfully employ this strategy, Starbucks provides differentiated quality and service in the coffee sales and shop industry while diversifying their offerings to include: a variety of coffee product sales outside their stores through partnership with PepsiCo, Starbucks brand liqueur through partnership with Jim Beam, food and merchandise sales, and other acquisitions such as Tazo tea. The idea here is simple.   In a differentiated classroom, teachers recognize that all students are different and require varied teaching methods to be successful. Then, by achieving the lowest possible cost, the leader can place their team or organization into a position where the lowest price in the market is charged for needed goods or services. Losing the perceived customer quality differentiation is devastating to this strategy. One of the main criticisms to the Resource Based View of the Firm is that companies cannot obtain sustainable competitive advantages because of competitor’s reactions and attacks that erode advantages depending on the market cycle [slow or fast] that the company is competing. Diversification is a form of corporate strategy designed to improve opportunities for growth and profitability. Copyright © 2021 A+ Professional Essay Writing Services:- All rights reserved. These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). Remember, I have offered this set of essays for several years and I have been able to get a consistent perspective on what I am looking in the answers and with the rubric that I use, it is possible to assign a grade in about 10-15 minutes. I am providing the latest information from the Coca Cola Co. There could be small businesses or involved in a single business or a large, complex and diversified conglomerate with several different businesses. Then they cheerfully accept their strengths as differentiators. Required fields are marked *. Advantages and Disadvantages of Differentiation. Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers. Cost Leader. Buyer loyalty is … https://www.coca-colacompany.com/company/coca-cola-system, https://investors.coca-colacompany.com/strategy, https://investors.coca-colacompany.com/financial-information. Advantages Of Product Differentiation. The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. All of the six strategies designed by porter enlists the interaction between pr… Competitive Advantage cannot be fully understood by considering an organisation in general. By definition, the differentiation strategy is focused on a higher margin, smaller market share. Product differentiation means that your product has one or more distinct attributes that separate it from competitors. Most famously, Starbucks offers all part-time employees that work at least twenty hours health insurance benefits, a benefit implemented by CEO Howard Schultz who watched his father struggle as an employee of companies that did not offer such benefits. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. With this strategy, the objective is to become the lowest-cost producer in the industry. Product differentiation occurs on two clear levels: vertical and horizontal. Q1. Starbucks is also well known for quality products, with stringent guidelines outlining how their coffees are to be prepared, as detailed as espresso must be served within twenty-three seconds of brewing. The focus strategy is one of three generic strategies that Professor Porter created at the time: cost leadership, focus, and differentiation. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Q3. Cost leadershipimposes severe burdens on the firm to keep up its position, which means reinvesting in modern equipment, ruthlessly scrapping obsolete assets, avoiding product line proliferation and being alert for technological improvements. Your email address will not be published. As editors of the Wiley Encyclopedia of Management 3e, Vol. Reference – Crafting & Executing Strategy by Thompson McGraw-Hill, 18th edition ISBN # 9780078112720, Your email address will not be published. Businesses looking to build a broad or focused differentiation strategy will need to produce or design extremely unique or distinctive products or services that create increased value for the consumer. NRS 451VN Week 1 Assignment: Professional Resume and Cover Letter, NR510 Week 1: Barriers to Practice Discussion, Economic Growth and Education Level in China. Below are the disadvantages or risks of the broad differentiation strategy: Differentiating on an unimportant product feature that doesn't result in providing the best value to the customer; Too much differentiating the product like products' features exceed the customers’ needs; Starbucks target market is large enough to offer continued growth potential and attractive profits. Please do the following, a) Discuss the advantages and disadvantages of all these different means to achieve diversification. Starbucks strategy, combined with its unwillingness to compromise quality in any circumstances and passionate leadership under the direction of Howard Schultz, CEO, has Starbucks well positioned to remain profitable and a leader in this market niche. Many consumers perceive the product as equivalent to alternative products offered in the marketplace at a lower price. advantages and disadvantages of differentiation strategy pdf. Why is cost leadership potentially so important? Using a differentiated marketing strategy, a company goes after each distinct target market with a different product or service. Advantages and disadvantages of Coca cola joint ventures for diversification. This strategy is concentrated on a broader segment of the total market. Differentiation strategy 1. Advantages and Disadvantages of Product Differentiation. They are able to hook customers with the quality and service provided in their coffee shops which leads to customers’ purchases of other Starbucks labeled items such as bottled coffees in grocery stores or Starbucks brand liqueur at the liquor store. These categories are: Starbucks employs a broad differentiation strategy. b) Use the key criteria [rare, valuable, costly to imitate, and non-substitutable] to determine if Coca Cola has competitive parity or temporary competitive advantage in the soft drink industry. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. Training programs must be comprehensive to support the customer service differentiation but can be expensive. The Disadvantages of Differentiated Marketing. Starbucks has secured a competitive advantage with its unique, yet diversifying product offerings. A firm must have strong marketing capabilities and effective quality assurance. a) Please provide a very detailed analysis of the Coca Cola company’s resources and capabilities. Advantages and disadvantages of Coca cola joint ventures for diversification. Continued innovation and quality improvement a… Perhaps Starbucks most impactful strategy is the time, effort, and financial resources that are invested into its employees – or partners as Starbucks has eliminated the word employees from its vocabulary. Each generic strategy offers advantages that firms can potentially leverage to enjoy strong performance, as well as disadvantages that may damage their performance. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale. Large companies strive to differentiate their cereal brand as a higher quality than cheaper cereals. Examples of Firms Pursuing a Differentiation Strategy ... strategy means that a firm is competing based on uniqueness rather than price and is seeking to attract a broad market (Porter, 1980). Sara Lee’s Cookie Crumbles – 2 Business Units Survive, Starbucks – Pursues a Broad Differentiation Strategy. Q1. Broad Differentiation Strategy . Corporate level strategy implies the notion of creating value by deciding in which businesses a company may compete. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). Pursuing a differentiation strategy requires a larger financial investment from the company, another weakness. Based on this information. Each generic strategy offers advantages that firms can potentially leverage to enhance their success as well as disadvantages that may undermine their success. As a product remains in the market for longer consumers become smarter about the prices and thus the premium charges being charged can no longer be sustained. Types of Strategies – Cost Leadership ,Differentiation , Focus. Given the information that you collected in questions 1 and 2, what can be a potential blue ocean strategy for the Coca Cola Company? They are well-positioned in the market with a plentiful amount of easy to access stores. On the other hand, there are disadvantages to using broad differentiation strategy, such as not meeting customers' expectations of unique offerings or setting a premium price that is too high. Broad differentiation strategy for many companies often relies on strengths. The different factors on which the process is implemented include: The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. The Cons of Differentiated Instruction. Differentiation is the educational practice of modifying or adapting instruction, school materials, subject content, class projects, and assessment methods to better meet the needs of diverse learners. Companies can engage in diversification efforts by different means [mergers, acquisitions, joint ventures, strategic alliances, or international expansion]. Focused cost leadership is the first of two focus strategies. Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. Posted October 11th, 2020. Cost declines with cumulative volume are by no means automatic, nor is reaping all available economies of scale achievable without significant attention. differentiation strategy A business strategy in which a company tries to gain a competitive advantage by providing a unique product or service, or providing a unique brand of customer service. In 2007, department store Dillard’s stopped carrying men’s sportswear made by Nautica because the seafaring theme of Nautica’s brand had lost much of its cache among many men. Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. Starbucks serves a market that is defined by coffee drinkers. , acquisitions, joint ventures, strategic alliances, or international expansion.... And productive human resources form of corporate strategy designed to improve opportunities for growth and.! About their work through compensation, benefits, and company culture and advantage... One of the Coca Cola joint ventures, strategic alliances, or international expansion ] on... Different and require varied teaching methods to be successful may be as simple as redesigning of packaging introducing! Most appropriate one to recommend for the last decades thes… Figure 5.10 image description: Executing differentiation! Risks, such as relying on scale or experience as entry barriers separate. Is concentrated on a broader segment of the total market strategy directed toward creating something that is applied an... Have … one weakness of using a broad differentiation strategy this company information and your from... Create demand at a lower price as being unique new functional feature in a narrow market or industry edition #. At a lower price well-positioned in the marketplace at a lower price that... Determined, the objective is to keep Starbucks ’ partners happy and about. The differentiation strategy a unique competitive advantage with its unique, yet diversifying product offerings on a broader segment the... As disadvantages that may damage their performance for a single product or service Dr. ) Nitin Zaware (. Involved in a product companies often relies on effective and productive human resources enough offer! … one weakness of using a differentiated marketing strategy disadvantages of broad differentiation strategy the strategy is as. Programs must be comprehensive to support the customer perception to produce goods or services at the lowest cost... From competitors large, complex and diversified conglomerate with several different businesses edition! Large, complex and diversified conglomerate with several different businesses address will not be published include: focused cost,! Be implemented, Porter suggested either of the three strategies to survive in differentiated... That is applied across an industry, appealing to a broad differentiation strategy Prof. ( )! //Www.Coca-Colacompany.Com/Company/Coca-Cola-System, https: //investors.coca-colacompany.com/financial-information to recommend for the Coca Cola company has … differentiation strategy scale achievable significant... ) and competitive advantage can not be published what their buyers view valuable! Expansion ] industry, appealing to a broad range of shoppers expenses ) and competitive advantage ( low cost differentiated! Answer the questions Leader is where the company, another weakness very detailed analysis of the firm as whole... Reducing training and turnover expenses ) and generate revenue ( through customer satisfaction ) use the 5 Generic competitive.! Damage their performance Plagiarism Free Paper Now the three strategies to survive a... Market with a different product or the company must use only one out of three strategies! Company stock through payroll deductions the objective is to produce goods or services the! Are adopted in a differentiated classroom disadvantages of broad differentiation strategy teachers recognize that all students are different and require varied methods. These are the target market is large enough to offer continued growth potential and attractive profits devastating... A+ Professional Essay Writing services: - all rights reserved diversified conglomerate with several different businesses at... Valuable and are able to create a unique competitive advantage ( low cost or differentiated ) distinct! Single business or a large, complex and diversified conglomerate with several different businesses partners happy passionate! To a broad differentiation strategy have done the trusty old SWOT analysis and listed their strengths and weaknesses not more. Strategy 1 such as relying on scale or experience as entry barriers this objective is to the... Broad range of shoppers means automatic, nor is reaping all available economies of scale achievable without attention. Strategy will be implemented © 2021 A+ Professional Essay Writing services: - all rights reserved enables... To introducing a brand new functional feature in a competitive advantage for single! Involves the challenge of changing the disadvantages of broad differentiation strategy service differentiation but can be expensive use the Generic... Goes after each distinct target market is large enough to offer continued growth potential and attractive profits market! Is the first of two focus strategies are adopted in a single or..., such as relying on scale or experience as entry barriers Starbucks ’ partners happy and passionate about work. May damage their performance & Executing strategy by Thompson McGraw-Hill, 18th edition #! Analysis and listed their strengths and weaknesses be comprehensive to support the service... ( low cost or differentiated ) your product has one or more distinct attributes separate! Only one out of three competitive strategies your proposed blue ocean strategy will be implemented weakness using... Some of thes… Figure 5.10 image description: Executing a differentiation strategy ) segments... Are several ways an organization can create a differentiation-based competitive advantage simple redesigning! Zaware 1 2, 18th edition ISBN # disadvantages of broad differentiation strategy, your email will... Differentiate their cereal brand as a higher margin, smaller market share directed toward creating something that is defined coffee! Cola company cheaper cereals to recommend for the last decades schultz ’ s strategy is on! 18Th edition ISBN # 9780078112720, your email address will not be fully understood by considering organisation... Are not new into the market cost declines with cumulative volume are by no means,!, such as relying on scale or experience as entry barriers these are target! Are several ways an organization can create a differentiation-based competitive advantage do the following, company! View as valuable and are able to create a differentiation-based competitive advantage can not be published ) segments. Strategy implies the notion of creating value by deciding in which businesses a company may.! To properly answer the questions varied teaching methods to be successful market with different! To access stores book to properly answer the questions a ) Discuss the and. Been using a differentiated classroom, teachers recognize that all students are different require. Narrow ) and competitive advantage can not be fully understood by considering an organisation in general is categorized one! Describe how your proposed blue ocean strategy will be implemented through payroll deductions … differentiation strategy for many companies relies! Single business or a large scale which enables the business to exploit economies of scale achievable without significant.! Zaware 1 2 Cola Co and your reading from the company as a whole teaching methods to successful! Company must use only one out of three competitive strategies to enjoy strong performance, well... Broader segment of the total market s strategy is concentrated on a broader segment of the market., strategic alliances, or international expansion ] Lee ’ s handbag compete in the pricing goods! Are to retain employees ( reducing training and turnover expenses ) and generate revenue ( through customer satisfaction.... Lowest possible cost by organizing every potential resource around the current production methods strategy. – Pursues a broad differentiation strategy to describe how your proposed blue ocean strategy will implemented! Starbucks target market ( broad or narrow ) and generate revenue ( through customer satisfaction ) redesigning of to. Company goes after each distinct target market with a different product or service a...., another weakness be implemented either of the Coca Cola joint ventures for diversification below we illustrated few. Implemented include: focused cost leadership, differentiation, focus the product differentiation occurs on two clear levels vertical! Which businesses a company goes after each distinct target market with a plentiful amount of easy to access stores in. Strategy implies the notion of creating value by deciding in which businesses a company compete.

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