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Strategic Planning (Name) (Tutor’s Name) (College) Strategic Planning Introduction Business organizations usually formulate strategies depending on the size and nature of their business. However, according to the generic strategy concept, a business firm has two determinants to be followed in the industry.
He explained that the success of the company depends on the strategy they chose such as cost leadership, differentiation, and focus; and a firm, for its smooth running must chose one of the strategies and work on it. Cost Leadership The cost leadership strategy helps the firm to remain as a low-cost producer in the industry. To achieve the maximum result, this strategy must be utilized on a standardized product by trying to make maximum use of the cost sources. When there is a price war, or when the industry matures, a firm with cost leadership can remain profitable for longer period than the competing firms. Differentiation Strategy Differentiation strategy means uniqueness within the industry, having specific dimensions that buyers are ready to value and willing to pay a price premium. Even if there is an increase in the price of the product, the producer still gets the profitability, because the product has the unique attributes and the consumers are not able to find a substitute product easily. Focus strategy This strategy tries to achieve either cost advantage or differentiation advantage, concentrating on a narrow segment. The focus strategy focuses entirely on the needs of group, and so enjoys a greater customer loyalty. ...
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