Strategic Management Report: Differentiation and Cost Leadership

This report delves into the core concepts of strategic management, focusing on differentiation, cost leadership, and cost diversification. It explores various sources of differentiation, emphasizing how companies can create unique value propositions and gain a competitive edge through strategies like offering services at lower prices or providing unique services. The report also examines the organizational resources and requirements necessary for implementing cost leadership, highlighting the importance of internal efficiency, tight control over production costs, and investments in technology and human resources. Furthermore, it outlines the benefits of cost diversification, such as increased sales volume, enhanced brand image, and customer retention. The report concludes by summarizing the key findings, underscoring the significance of these strategies for achieving sustainable competitive advantages in the market.

Strategic Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1 Various source of differentiation.............................................................................................3
2 Various resources and organisational requirements to implement cost leadership..................3
3. Benefits of cost of diversification...........................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Strategic management can be defined as formulation as well as implementation of
strategies and initiatives which is being taken by the company's top manager based on
assessment of external as well as internal environment in which it operates.
1 Various source of differentiation
Differentiation can grow out of the firm's value chain. There are several resources and
drivers of uniqueness that can contribute to differentiation. Some sources that leads
diversification and uniqueness of products and services of an organization include:
Cost leadership: According to this source and strategy, companies provides its services
at lower price. By doing this they can attract wider range of customers. Examples of companies
that use this strategy are: Walmart and Costco.
Differentiation: Differentiation means provide unique services or better benefits. It is
stated that several companies make an effective use of advanced technology and take its products
innovative for becoming different from competitor (Pan and et.al., 2019).
Differentiation Focus: In this strategy, companies focus on a particular segments in its
target segments or niche segment. So, it can be said that the focus of companies is on a particular
target.
Cost Focus: In this source of diversity, the focus is to become the cheapest offerings to
all type of segments or highly target market segments.
2 Various resources and organisational requirements to implement cost leadership
Cost leadership turns out to the competitive strategy through which organization has to
compete in the market on the basis of price. Price has been termed as the asset of an organization
which can help in achieving the competitive advantage. There is the internal efficiency in order
to gain the margin above the average return on with cost of customers. When there is continuous
effort to reduce the price will be help in having the cost retentiveness with competitors in order
to have the successful cost leaders.
There are various strategies used to gain the effective competitive advantage as to
become the successful leaders. This may include on building the proper state of art for efficient
facility ans have the tight control over the production and overheads cost. This will help in
having proper research and development ans minimization cost of sales. There is the requirement

for the technical and human resource ion the organization for the successful implementation of
the cost effective strategy (Pereira-Moliner and et.al., 2016).
3. Benefits of cost of diversification
Cost diversification is the source of diversity and differentiation. There are several
benefits of adopting this strategy for both customers and organizations. Some benefits are being
described as follows:
 The main benefit is companies can take competitive advantages by providing services
and products at lower prices, discounted prices to high target market.
 It increases sales volume and revenue by attracting wider range of customers towards
buying their products (Meslier and et.al., 2016).
 Companies can increase its brand image by diversified its cost and pricing strategy.
 It can retain its potential and loyal customers within an organization for the longer run.
CONCLUSION
From the above study it has been summarized that different source played a vital role as it
helped the company in becoming different from competitors. It has several benefits of cost of
diversification as it minimized risks of loss.

REFERENCES
Books and Journals:
Meslier, C. and et.al., 2016. The benefits and costs of geographic diversification in banking.
Journal of International Money and Finance. 69. pp.287-317.
Pan, G. and et.al., 2019, February. Examining the therapeutic potential of various stem cell
sources for differentiation into insulin-producing cells to treat diabetes. In Annales
d'endocrinologie (Vol. 80, No. 1, pp. 47-53). Elsevier Masson.
Pereira-Moliner, J. and et.al., 2016. Organizational design, quality management and competitive
advantage in hotels. International Journal of Contemporary Hospitality Management.
28(4). pp.762-784.