We have discussed the two major options for a basic business strategy - low cost

Question

We have discussed the two major options for a basic business strategy - low cost and differentiation. Some firms try to find a balance between these two concepts, suggesting that they can offer products/services based on both fundamentals. This can be problematic because these two positions are often contradictory. Do you think this is a feasible way to proceed for the long-term viability of the firm? What kind of message should the strategic management team send out that will help employees deal with what seems like contradictory perspectives? Also, what kind of message should the firm present to the potential customer base?

Explanation / Answer

In my opinion it will be difficult to achieve differentiation while opting for a low cost strategy because differentiation requires the firm to make the product attractive by adding unique qualities which usually incur higher cost. Hence it will be difficult to achieve balance between the two strategies but once the firm finds balance, it would help the firm to achieve competitive advantage and succeed in the market. Hence it would be a feasible way to proceed for the long term viability of the firm.

The message sent by the strategic management team to employees should clearly state the firm’s decision to achieve low cost while ensuring quality. The message should insist employees to be part of the mission and help to achieve the vision set. The problem areas and the support needed from the employees should be presented along with benefits they would receive once the firm would achieve the goals. The strategic team should also invite opinions from the employees on achieving the firm’s goals which would help the firm to utilize the creativity and innovative abilities of the employees.

The firm should highlight the low cost advantage along with the unique features while comparing to other brands in front of the potential customers. The message should be able to convince the customers on how the firm has achieved low cost without compromising on quality because the firm will not be able to achieve competitive advantage if the customers are doubtful on quality.

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