Broad cost leadership strategy and focus

Eric was named president and CEO in and chairman of the board in Since his appointment, Aramark has recorded consistent growth in sales, new business and adjusted net income and operating margins. He is also improving profitability by establishing a repeatable business model across the company. He participated in the successful process of taking PBG public in

Broad cost leadership strategy and focus

The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. In the event of a price war, the firm can maintain some profitability while the competition suffers losses. Even without a price war, as the industry matures and prices decline, the firms that can produce more cheaply will remain profitable for a longer period of time.

The cost leadership strategy usually targets a broad market. Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether.

If competing firms are unable to lower their costs by a similar amount, the firm may be able to sustain a competitive advantage based on cost leadership. Firms that succeed in cost leadership often have the following internal strengths: Access to the capital required to make a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome.

Skill in designing products for efficient manufacturing, for example, having a small component count to shorten the assembly process. High level of expertise in manufacturing process engineering. Each generic strategy has its risks, including the low-cost strategy. For example, other firms may be able to lower their costs as well.

As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage.

Additionally, several firms following a focus strategy and targeting various narrow markets may be able to achieve an even lower cost within their segments and as a group gain significant market share.

Broad cost leadership strategy and focus

Differentiation Strategy A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product may allow the firm to charge a premium price for it.

The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product's unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily.

Firms that succeed in a differentiation strategy often have the following internal strengths: Access to leading scientific research. Highly skilled and creative product development team. Strong sales team with the ability to successfully communicate the perceived strengths of the product.

Corporate reputation for quality and innovation. The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes.

Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments.eCornell's leadership certificate programs focus on strategy development, business acumen, and the leadership skills needed for execution.

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Cost Leadership Strategy. This generic strategy calls for being the low cost producer in an industry for a given level of quality.

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Broad cost leadership strategy and focus

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