Differentiation And Cost Leadership: Differentiation And Business Strategies

Discussion Question 6.1 What are some drawbacks and risks to a broad generic business strategy? Differentiation and cost leadership are two generic business strategies. The goal of a differentiation strategy is to create a value that is higher for the customers than the value created by the competition. Costs are kept low and features that are unique are also delivered to the customer. On the other hand, with cost leadership the goal is for the firm to create a value for the customer that is the same or similar but at a lower price (Rothaermel, 2013). There are several drawbacks and risks to a broad generic business strategy. With differentiation there will always be in a change of customer’s taste or what the customer wants. In addition, there will imitation by the competitors of the firm. Other companies often are able to gain a higher level of differentiation because of being more diverse and seeking a focus strategy. A drawback with differentiation strategy is that profits will be higher than with a cost leadership. Differentiation often will create a barrier that is higher and a cost

In order to unseat Windows the firm would have to use innovation. According to Rothaemel innovation drives the process of competition (Rothaemel, 2013). Innovation also allows firms to be able to redefine the marketplace. The firm could use a low-cost strategy in its effort to unseat Windows. It would to the advantage of the organization to determine the needs of the customers in the market by conducting market research. The competitive advantage would also need to be considered while developing the market strategy. The firm should have marketing plan and set up strategies to advertise to the targeted market. The marketing strategy would have to be innovative enough to make people have a desire to try the new operating system. New industries often come from innovation (Rothaemel,