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Wsj Ways of Possibly Follow Cost Leadership and Differentiation S...

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Wsj Ways of Possibly Follow Cost Leadership and Differentiation Simultaneously

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  • April 2012
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Is it possible for a company or business unit to follow a cost leadership strategy and a differentiation strategy simultaneously? Why or why not?

It is possible for a company to continue a cost leadership strategy and a differentiation strategy simultaneously but it does not work for everyone. Some businesses rather follow the low cost way by striving for efficiencies and economies of scale rather than focusing on differentiating themselves from the competitors in a way other than price. Some companies like Toyota have actually joined both. Porter explains that a company lacking one of the competitive strategies is easily left with no competitive advantage. Businesses that join overall low cost and high quality differentiation strategy offer high quality and low prices which eventually complicates things following cost leadership.

Franchising is in a dilemma because their decline in revenue. Many are out looking for answers from the franchisers about unknown marketing expenses and "ghost" money. Franchise owners like Coldstone ones are paying too much money for product and making less every year. Economic pressure plays a great part in this outcome especially when franchisers do not adapt to less expensive products due to the peoples limiting of discretionary spending. A problem is that due to lengthy agreements franchisees are required to sign, many rules must be followed which usually require arbitration for a dispute to be fixed, therefore restricting individual lawsuits. After a lawsuit to Edible Arrangements, management took the smart route into investing more in ecommerce and social media which I think are the best ways into getting higher probability due to keeping up with consumer taste.

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