Strategic Management Essay Example | Topics and Well Written Essays - 750 words - 12

Strategic Management - Essay Example A combination of competitive advantage and the various activities in Porter’s value chain enables the firm to attain an above average performance in the market. Cost leadership involves offering the goods and services to the consumers at a lower price as compared to the competition. The major goal of cost leadership is to provide consumers with the product at low prices and specific quality level. This approach ensures that, and the firm’s products are availed to the consumers at a price which is lower than that of the competition. Cost leadership is effective in the basic commodity industry such as pulp, tissue paper, food color and other basic products. Differentiation, on the other hand, emphasizes on quality which is the opposite of cost leadership. Differentiation aims at providing quality products to consumers at appropriate prices hence increasing the profits. Cost leadership and differentiation strategies can be achieved by organizing the five activities of Porter’s value chain model effectively. The two main ways in which cost leadership can be achieved through Porter’s value chain model include, the firm may choose to lower the cost of the various activities in Porter’s value chain model or reconfigure the activities in the model to minimize cost. An analysis of the cost of the various value chain activities is done by allocating cost to each of the activities in Porter’s Value Chain. The lowest cost obtained on each of the value chain used in the production process ensuring low-product cost. Cost advantage can also be achieved by reconfiguring the activities in Porter’s Value Chain model. This involves implementing structural changes such as the production process, new procurement and distribution process and adopting a new sales approach. The process of reconfiguring the value chain model activities is done to ensure low cost of production, marketing, distribution and purchasing from the