Analysis of Strategic Planning Essay Example | Topics and Well Written Essays - 1000 words - 1

Analysis of Strategic Planning - Essay Example He explained that the success of the company depends on the strategy they chose such as cost leadership, differentiation, and focus; and a firm, for its smooth running must choose one of the strategies and work on it. Cost Leadership The cost leadership strategy helps the firm to remain as a low-cost producer in the industry. To achieve the maximum result, this strategy must be utilized on a standardized product by trying to make maximum use of the cost sources. When there is a price war, or when the industry matures, a firm with cost leadership can remain profitable for a longer period than the competing firms. Differentiation Strategy Differentiation strategy means uniqueness within the industry, having specific dimensions that buyers are ready to value and willing to pay a price premium. Even if there is an increase in the price of the product, the producer still gets the profitability, because the product has the unique attributes and the consumers are not able to find a substitu te product easily. Focus strategy This strategy tries to achieve either cost advantage or differentiation advantage, concentrating on a narrow segment. The focus strategy focuses entirely on the needs of the group, and so enjoys greater customer loyalty. The following part of the paper will discuss how some prominent retail firms have been implementing the above-said strategies in their business operation. Tesco, a world-famous retailer firm, refers to generic strategies as a tool to determine the characteristics of retailers’ response to industry structure. Big concerns like Tesco can obtain the reasonable cutthroat benefit by following any one of the three generic strategies of Porter. By utilizing the first strategy of cost leadership, Tesco can try to have the lowest production cost in the whole industry and can offer their products and service to the market at the lowest cost. The cost leadership strategy shows the ability of the firms to control their operating costs so well that they can price their products competitively. Having a greater degree of competitive advantage, they are able to generate high profit margins. If differentiation strategy is to be established, Tesco has to offer products and services which has the unique feature that is not offered by any other firm. If so, the firm gets a brand loyalty and inelasticity of price. Between these two strategies, Tesco chooses to follow the cost leadership strategy. To select between the strategies, the management had made use of the last porter’s focus strategy. For the implementation of the strategy, they introduced different tactics, such as focusing on the internal efficiencies which helped Tesco to resist the outer force from the other firms. On the way to control their cost of production, they had regular communication with the suppliers, government, and the regulatory authorities. They made a policy to supply the specific products to the broad market. These helped them in attaini ng a high position and profitability.