Strategy Implementation and Control
Strategy Implementation and Control
Cost leadership involves Walmart is among one of the large scale companies in the United States that uses the cost leadership strategy. According to (Rothaermel, 2015), financial analysis prove that using cost leadership has made it successful over the years. In differentiation strategy, we will look at Apple company. It is one of the largest companies in the United States that deal with technology and innovations. Apple is also diversified in a way that it produces several products thus making it more attractive to the customers. Apple has diversified itself and it uses the differentiation strategy.
Walmart opted to use cost leadership strategy and it has worked well for their profits. Walmart has rendered the bargaining power of the suppliers low. Walmart usually buys its products at a low price, sell the products at a relatively high cost but still manages to be affordable to its customers. Walmart has an advantage of selling affordable products which gives them many customers. This thus makes the suppliers desperate into giving Walmart their products to sell. Thus Walmart will be at the liberty of the suppliers and can however manipulate with the bargaining power.
Buyers in Walmart do not have a bargaining power. Walmart sells its products at a very affordable price compared to other stores thus the buyers are usually not compelled to. Walmart also has a variety of customers with a broad base thus bargaining has never been an option. Walmart however does not have new potential entrants in the business because they can manipulate the cost of their products to be very cheap thus making competition with other upcoming stores difficult ( http://www.cnbc.com/2016/05/19/wal-marts-low-price-commitment-should-send-shivers-across-retail.html )
Cost leadership in Walmart is not necessarily the only strategy used. Walmart has also employed diversification where several products are sold. Diversification in Walmart gives a positive results and success when it comes to General products. Having diversification in individual products can have some of the suppliers withdrawing because the profits might not be as they expected. This will pose a risk to the company because it will have lost time and money investing in that individual product (Ibrahim, 2015).
Apple has been able to use diversification and product differentiation over its competitors. They have been able to create several products that have good quality and technology as well. The most common product differentiation in Apple is through the variety of products it manufactures and produces. They also provide good customer services that favor them over their competitors. The features used in making the products are unique and the company strives at improving its own products by making them better than the ones they produced previously.
Through differentiation, Apple has been able to make their products have value such that more demands of the products are made in the market because they have good quality, unique and attract the customers. Product differentiation has also given Apple the bargaining power over buyers such that they are able to sell them at a very expensive rate, despite having competitors in the market because of their branding, innovations and uniqueness in technology. Apple has also maintained a competitive barrier with the competitors when it comes to quality and cost of its products. This thus gives the customers a guarantee that the products from Apple are long lasting and helps a customer save on their cost in purchasing for the product (Lee, Kim, Seo & Hight, 2015).
When it comes to Apple company, diversification can bring about failure in the business. As shared by (Ibrahim, 2015), diversification can be caused when the several products being produced in the company need attention and focusing on just one or several products will not benefit the company. This thus require extreme keen and care on not to focus so much on just one product. Price differentiation might work with Apple for now but in future it might pose a threat caused by the competitors in the industry. The quality might be good but introduction of Android is likely to overtake them because of it is affordable and has several unique features as well.
Walmart should continue using the cost leadership strategy. As share by (Block, Kohn, Miller & Ullrich, 2015), cost leadership strategy gives a company or corporation control over the suppliers and buyers. Through this strategy, Walmart is able to make more billions of money and more profits becoming more successful. Walmart has also been able to minimize competition because of their affordable prices and their ability to have control over the prices of the products in the stores (http://www.cnbc.com/2016/05/19/wal-marts-low-price-commitment-should-send-shivers-across-retail.html).
Walmart has also been able to achieve economies of scale such that it has increased their operation by minimizing the costs of products so that many customers can be able to purchase for the products. This has made Walmart achieve desirable profits on the numerous sale of products because it has increased the level of productivity in their stores and has made the company very effective and efficient. Cost leadership has also made Walmart introduced its own cultures which has yielded positive results over its competitors, thus achieving efficiency.
Apple however should continue with diversification and product differentiation. Apple has been known to producing products with good quality thus having product differentiation will work against its competitors. This is because differentiation will give the customer an opportunity to test the Apple products against those of the competitors and give more concentration on the design and the quality as well. The customer will thus give credit to Apple products for being unique and exemplary thus hindering substitution (http://royal.pingdom.com/2011/06/13/the-diversification-of-apple/).
Apple should still use differentiation because they necessarily do not have to reduce their price and become affordable or cheaper as compared to its competitors in the market. Differentiation thus gives Apple that equal opportunity of not competing with its competitors in terms of prices but on quality. Apple will also have more loyal customers if they continue using differentiation. This is because it gives Apple the opportunity to constantly build on their brand by delivering improved and better versions of their products in order to maintain standards, quality, customers and the position in the market (http://royal.pingdom.com/2011/06/13/the-diversification-of-apple/)
Walmart has been successful relative to their competitors due to cost leadership because it has enabled good managerial skills in the supply chain department. Walmart uses a system in the supply chain department that has enabled the data of the products to be tracked as they are brought in by the manufacturer, to where they are stored and on the shelf. This has been efficient and effective because money is being closely monitored to avoid losses from bad management (Lee, Kim, Seo & Hight, 2015).
Apple however has achieved good balance by maintaining its customers through good customer service, better innovations, diverse products and quality products. Despite having the prices of their products very high, they have been able to maintain their standards by delivering good quality products love by customers. Apple has also had the advantage of experiencing high sales when the market has undergone downturns as compared to the competitors.
FT Rothaermel. (2015), Strategic management
JH Block, K Kohn, D Miller & K Ullrich. (2015), Necessity entrepreneurship and competitive strategy, Small Business Economics.
AB Ibrahim. (2015), Strategy Types and Small Firms’ Performance An Empirical Investigation
YK Lee, SH Kim, MK Seo & SK Hight. (2015), Market orientation and business performance: Evidence from franchising industry