How to Write a Summary of an Article? In the last decade nestle is a leading nutrition and health corporation that promise a safe and high quality product to its customers.
By Lee Frederiksen, Nestle integrated costleadership and differentiation stratgy. February 14, Share Have you been competing for work that you are more than qualified to perform, only to be underbid by your competition?
Or maybe you have been the one underbidding, which leaves you no room for growth or prosperity. If you want to stop competing on price alone, it may be time to develop a stronger differentiation strategy. Usually, it involves highlighting a meaningful difference between you and your competitors.
And that difference must be valued by your potential clients. A strong differentiator will provide a competitive advantage for your firm. Michael Porter, the famous strategist, maintains that there are only two ways to gain a sustainable advantage over your competition.
One way is to compete on price, highlighting the similarities you share with your chief competition: All it takes is someone willing to undercut your lowest price.
The lowest-cost strategy also exposes you to commoditization and a much wider range of competitors, including do-it-yourself options, off-shoring and automation. Separate yourself from competitors in a way that is both important and relevant to potential clients. According to our definition above, this is a differentiation strategy.
Now, a point of differentiation may be broad-based and set you apart from the rest of the industry or more narrow, appealing to a niche market.
Offering a pay-for-results billing model, instead, would separate you from competitors. Of course, developing a broad-based differentiation strategy, in which your firm is substantially different from your industry as a whole, is hard to achieve. This is why many firms choose to compete with a focused strategy.
In a focused strategy you narrow your appeal to a niche audience.
For example, an accounting firm that works exclusively with chain restaurants has a very compelling differentiator to that niche market segment. However, a different audience segment, such as automobile dealers, would find no value in working with the restaurant specialists. Advantages of Differentiation There are some big advantages to using a differentiation strategy.
Here are some of the benefits. You do not have to compete on price alone. Since you have distinguished yourself from your competitors the prospective client cannot reduce their choice to the dimension of cost alone.
You have greater appeal to your target audience. Since you are different, and presumably better, you make a more appealing choice. This makes it easier to generate interest and close sales. There is no direct substitute. This is a related point to the appeal of your difference. Lack of direct comparability forces the prospect to focus on the incremental value of your difference.
This adds value that other options do not have. Greater value and a lack of comparable substitutes result in greater loyalty to your firm. There is no good reason to switch if you are delivering on your promise and no comparable alternative to switch to. You can command greater fees. Assuming that your differentiation is one that adds value and is not available elsewhere you are in a position to command higher fees.
This is especially true if your differentiator is around specialized expertise. Differentiators are the building blocks of a differentiation strategy. First it must pass three tests. Three Tests for a Successful Differentiator How do you know you have a good differentiator? We recommend you put each one to the test.
Apart from the moral hazard of making stuff up, it is simply too easy for people to see through exaggerated claims. Whatever you put forth s a differentiator, your firm has to live it each day.
For example, many firms say they have superior client service, but they do nothing special to make it a reality. Nothing to ensure it actually happens.An integrated cost-leadership and differentiation strategy A strategy to produce relatively differentiated products or services at relatively low costs.
is a combination of the cost leadership and the differentiation strategies. Firms that can achieve this combination often perform better than companies that pursue either strategy separately. Business Strategies and Gaps in Porter’S Typology: A Literature Review Kerem Sumer Graduate Scholar, Dept.
of Industrial Engineering, Istanbul Technical University Integrated Cost Leadership and Differentiation. Journal of Management Research ISSN X , Vol. 4, No. 3 Porter () suggests that differentiation, cost.
Jul 01, · Porter’s Differentiation Strategy. Another way of achieving a competitive advantage for companies is through differentiation strategy (Porter, ). Similar to my previous post (cost leadership and cost drivers), each value activity is determined by as series of drivers.
Differentiation. Approaches to differentiation include developing unique brand images, unique technology, unique features, unique channels, unique customer service or the like. In other words, the key to differentiation is obtaining an advantage that is readily perceived by the consumer.
Nestle business-level strategy is integrated cost leadership or differentiation with wide range of products and low cost operators. Nestle strategic leadership is to force the business to become more efficient, to create a regional manufacturing network, integrate the company’s business on a global scale and to reduce marketing expenditures.
Implementing an Integrated Cost Leadership/Differentiation Strategy (cont’d) •The integrated form of the functional structure must have: Decision-making patterns that are partially centralized and partially decentralized. Semi-specialized jobs.
Rules and procedures .