Answer to Question #262630 in Management for Paia

Question

A firm with a highly differentiated product can increase the volume of its sales. Increased sales volumes can enable a firm to reduce its costs. High volumes can enable a firm to reduce its costs. High volumes of which the firm can use to invest in further differentiating its products. What advice would you give a firm whose competition is enjoying this product differentiation and cost leadership advantage?

Answer 1

Advice to a firm whose competition is enjoying product differentiation and cost leadership advantage

        Firms using such strategies together create a sustainable competitive advantage which is a key vision and goal for many companies. Moreover, such firms have the advantage of leading the market shape to their liking because of the high-quality products and services that they acquire at low costs. Using cost leadership and product differentiation strategies requires a company to have high management skills for handling contradictions that arise from the two strategies. Such skills depend on the relations between employees and firm technology and the general relation between workers and the company who deal with the related technology. It is hard to imitate such relations and maintain a competitive advantage (Suryanto & Anggraini 2020).  Moreover, firms with such strategies should enhance the quality of their goods and services and their customer services to improve and maintain market share.

Reference

Suryanto, T., & Anggraini, E. (2020). Comparing cost leadership strategy with differentiation strategy towards firm performance on Jakarta Islamic Index. The Winners, 21(1), 35-41.