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Differentiation and Cost Leadership Strategy.

1. How can differentiation and cost leadership strategic options be employed to create and sustain a competitive advantage in a business?

2. What could be the differentiation and cost leadership options in pricing, features, and the clientele base for a social networking application?

3. What are the pros and cons of the differentiation and cost leadership options?

Solution Preview

How can differentiation and cost leadership strategic options be employed to create and sustain a competitive advantage in a business?

Differentiation Strategy

Companies generally use a differentiation strategy or a cost leadership strategy separately from one another. That is to say, they will use one or the other. When a company uses the differentiation strategy, all available resources and capabilities are used to produce a product that is superior in value to other products on the market of the same type, yet unique enough to attract attention. Another way to employ a differentiation strategy is to create different products in the same category to gain market share. A good example of this strategy comes from Keurig. Keurig has introduced coffee to the world for home use in a unique way. They have several different machines that all do basically the same thing, brew coffee. They have several brands of coffee, all are coffee, but each is different in a unique way that adds value to the customer and in turn the company.

The Cost Leadership Strategy

This strategy creates value by utilizing resources and capabilities to create a product that costs less than its closest competitor. This strategy relies ...

Solution Summary

This 791 word solution outlines cost differentiation strategy, as well as, Cost Leadership Strategy. It provides a look at the Pros and Cons related to both strategies, and contains one reference to tie the concepts of the material together.

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