Browse our collection of papers in
Porter#s Generic Strategies

C/B/595. Cost Leadership and Differentiation Strategies: Is a Hybrid Strategy Achievable?

WORDS:

2000

DATE:

2007

PRICE:

29.99 GBP

With the increasingly need to render better value to customers, employees, shareholders, and other external stakeholders, organisations are seeking strategies that focus on cost leadership, and differentiation. It is believed these strategies—low-cost and differentiation—can lend organisations to outsmart the competition. The successes of Ryanair and Southwest Airlines are said to reflect the cost leadership strategy dictating their business operations (Ryanair 2007, Southwest 2007) contrast to British Airways that has built success on service differentiation capturing values such as class, comfort, and care (BA 2007). But is it possible for an organisation to pursue a hybrid of low-cost and differentiation strategies successfully, particularly if one lend attention to a school of thought (Porter, cited from Kedia 1990) that the pursuit of differentiation would inevitably amount to rising cost whereas the pursuit of a cost leadership strategy would result to lower levels of product and service differentiation? This report holds that an organisation that pursues the hybrid strategy would yield smart operating performance than the rivals. Nonetheless, the fit of this strategy depends on corporate/business units of the organisation. The argument is expounded using two competitive companies—Dell Inc and Apple Computer Inc, both operate in the computing sector, with distinct approaches to win the competition.

KEYWORDS: Cost Leadership, Differentiation, Integrated Cost Leadership/Differentiation strategy,