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Jesson M. Villa Bs Accountancy 2A

The document discusses whether it is possible to combine cost leadership and product differentiation strategies. It notes that while firms generally focus on one strategy, they may employ aspects of both. To succeed, a firm needs to achieve at least one strategy significantly. Being stuck between strategies is not sustainable and risks failing to gain a competitive advantage.

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JESSON VILLA
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42 views1 page

Jesson M. Villa Bs Accountancy 2A

The document discusses whether it is possible to combine cost leadership and product differentiation strategies. It notes that while firms generally focus on one strategy, they may employ aspects of both. To succeed, a firm needs to achieve at least one strategy significantly. Being stuck between strategies is not sustainable and risks failing to gain a competitive advantage.

Uploaded by

JESSON VILLA
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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JESSON M.

VILLA
BS ACCOUNTANCY 2A

Is it possible to combine Cost leadership and Product Differentiation?

For a firm to sustain a competitive position, it must purposefully or as result of


market forces, arrive at one of these two competitive strategies which is Cost
Leadership and product Differentiation. And a firm succeeds by adopting and
effectively implementing one of the strategies. Recognize that although one strategy
is generally dominant, a firm is most likely to work hard at process improvement
throughout the firm, whether cost leader or differentiator, and on occasion to employ
both of the strategies at the same time. However, a firm following both strategies is
likely to succeed only if it achieves one of them significantly. A firm that does not
achieve at least one of strategy is not likely to be successful. This situation is what
Michael calls “getting stuck in the middle”. A firm that is stuck in the middle is not
able to sustain a competitive advantage. For example, giant retailer Makati
Supermarket been stuck in the middle between trying to compete with Pure Gold on
cost and price, and with style conscious target on differentiation.
In addition, in a study of the Korean manufacturing market Kim & Lim (1988)
found that differentiators also employed variables normally associated with cost
leadership strategy, and cost leadership strategies also demonstrated traits generally
linked to differentiators. The researchers suggest that there are no “pure” strategies;
both low cost and differentiation must be taken into account. (Hall, 1980; Miller &
Dress, 1993; Reddy, 1980; Kim & Lim, 1988)

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