Increasing competition at market place and the impact of globalization
has made the lives of firms difficult. To do something better has
become the necessity for organizations to stay competitive. Star
Textile is an organization, striving to win the competitive position at
market place. Firm is having strong creativity and marketing skills,
and has also been ranked in top 5 on the basis of R & D in Textile
industry. The competitor of Star Textile working in the same industry,
named as Acro Textile Mill, is also struggling to maintain its position
in the market and wants to sustain competitive edge through core
competency. Firm is having cost control & close supervision towards
labors. Firm also takes advantage of economies of scale. Firm has
maintained its position to make high volume of standardized products in
the target market. Another competitor is Zia textile which makes a
specific product. It makes uniforms for hockey and cricket team. Firm
has a competitive edge in the local market. But due to a new entrance
in the market, the firm may face threat. As the firm knows the target
market and its needs, so the cost can be minimized in terms of
advertisement, research & development and personal selling.
Question
While looking at the traits of the companies, which competitive strategies do you suggest for firms to adopt? Give logical arguments and describe the possible positive outcomes of using those particular strategies? (20 marks)
Idea Solution:
Competitive strategies are the method by which you achieve a competitive advantage in the market. There are typically three types of competitive strategies that can be implemented. They are cost leadership, differentiation and a focus strategy. A mixture of two or more of these strategies is also possible depending on your business’ objectives and current market position.
Cost leadership
The aim of this strategy is to be a low-cost producer relative to your competitors and is particularly useful in markets where price is a deciding factor. Cost leadership is often achieved by carefully selecting suppliers and production techniques to minimise production, distribution and marketing costs. However you need to be aware of any serious loss in quality that may render low cost ineffective.
Question
While looking at the traits of the companies, which competitive strategies do you suggest for firms to adopt? Give logical arguments and describe the possible positive outcomes of using those particular strategies? (20 marks)
Idea Solution:
Competitive strategies are the method by which you achieve a competitive advantage in the market. There are typically three types of competitive strategies that can be implemented. They are cost leadership, differentiation and a focus strategy. A mixture of two or more of these strategies is also possible depending on your business’ objectives and current market position.
Cost leadership
The aim of this strategy is to be a low-cost producer relative to your competitors and is particularly useful in markets where price is a deciding factor. Cost leadership is often achieved by carefully selecting suppliers and production techniques to minimise production, distribution and marketing costs. However you need to be aware of any serious loss in quality that may render low cost ineffective.
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