Differentiation Strategy of Companies
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1. In the following short story, a high-end pet supply store used a Focused Differentiation strategy but failed. Discuss the core strengths that are critical to make this type of strategy work assuming adequate market size.
A high-end pet supply store followed a generic strategy of "Focused Differentiation" catering to upscale pet owners who wanted to pamper their pets. Unfortunately, this demographic proved to be too small in the retail area she was drawing from to support her business. So, in desperation, she resorted to price-cutting to try to drum up business. However, if customers wanted to shop based on price alone, they would have gone either to Wal-Mart (which could sell even cheaper than she could and make a profit at that level!) or online. Customers who did come to the store just for the cheap items did not convert into long term customers because they were seeking low cost, not differentiation. This spelled "DISASTER" for the store, and it ended up bankrupt within three years of opening.
2. Name Hewlett Packard's Grand Strategy (out of the 15 listed). Then give an example of how HP's Grand Strategy is complemented by one or more internal strengths in the company using specific examples and/or data. (The 15 principal grand strategies are: concentrated growth, market development, product development, innovation, horizontal integration, vertical integration, concentric diversification, conglomerate diversification, turnaround, divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia.)
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Solution Summary
This solution provides a discussion about various differentiation strategies.
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1. Harvard Business School's Michael Porter developed a framework of generic strategies that can be applied to strategies for various products and services, or the individual business-level strategies within a corporate portfolio. The strategies are (1) overall cost leadership, (2) differentiation, and (3) focus on a particular market niche. Thus According to the Porter the competitive strategies are:
Cost Leadership, Differentiation, Focus Cost Leadership, and Focus Differentiation
The scope of a firm's activities affects the competitive advantage of the firm. Narrow scope (focus) can create competitive advantage through tailoring/adapting the value chain, and how broader scope can enhance competitive advantage through the exploitation of interrelationships among the value chains that serve different segments, industries or geographic areas. (Simonsays)
The core strength of the high end pet supply store will be its unique premium image in the minds of the customer. The premium image has to be reinforced by the premium pricing and by the other attributes of the product. It has to do any or all of the following:
Creating Strong Brand
A strong brand name can make a company's product more respected, more desired, or better known by consumers, resulting in a competitive advantage for the company.
For example StarBucks
Customization
Organization can start differentiating its customers and customizing its offerings to them. For this organization must gather its information about its customers and then interact with them further to deliver an end product that provides the most value.
Superior Technology
A company that has better technology than its competitors can often provide better features to the customer creating a unique image in the minds of the customer. For example I-Phone.
Highly skilled product development team
The team must be creative and talented to develop innovative products. For example Google.
Flexible control strategies
The organization may have flexible control instead of tight control, as the objective will be to create a distinct image. The effectiveness is more important.
Partnering with supplier and /or customer
This is important in order to create a unique product.
2. I would say that HP should adapt horizontal integration as the grand strategy. It is producing the HP products at various locations. For example to cater to the Asian markets the HP is producing the computer equipment in Taiwan, Singapore besides India and China. ...
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