Advantages and disadvantages of Coca cola joint ventures to achieve diversification Order 100% Plagiarism Free Paper Now. Vertical differentiation refers to products that fall on a scale from best to worst, highest to lowest, impacting the overall functionality of the item. Broad differentiation strategy for many companies often relies on strengths. Your email address will not be published. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. The advantages and disadvantages of the cost leadership styles show us that this process can be used to create a unique competitive advantage. Cost leadership styles focus on resource organization. The differentiation strategy is closel The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. Most famously, Starbucks offers all part-time employees that work at least twenty hours health insurance benefits, a benefit implemented by CEO Howard Schultz who watched his father struggle as an employee of companies that did not offer such benefits. AVOID buying essays online or even googling for Coca Cola SWOT\’s or other blogs/strategic aspects as the worst thing that you can do is get a fail score in this comprehensive exam. Advantages and disadvantages of Coca cola joint ventures for diversification. Differentiation Strategy Prof. (Dr.) Nitin Zaware Prof. (Dr.) Nitin Zaware 1 2. Product differentiation means that your product has one or more distinct attributes that separate it from competitors. Please do the following, a) Discuss the advantages and disadvantages of all these different means to achieve diversification. differentiation strategy A business strategy in which a company tries to gain a competitive advantage by providing a unique product or service, or providing a unique brand of customer service. The Coca Cola Company has been using a broad differentiation strategy to compete in the American soft drink industry for the last decades. I feel that you do not need more than this company information and your reading from the book to properly answer the questions. A broad differentiation strategy: Trying to differentiate different ways of delivering company products from competitors that will appeal to a wider range of customers [Some examples are Nordstrom (known for customer service policies and staff) and Whole Foods (emphasis on health foods and organic groceries) Starbucks target market is large enough to offer continued growth potential and attractive profits. 1. Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. These categories are: Starbucks employs a broad differentiation strategy. Starbucks serves a market that is defined by coffee drinkers. b) Use the key criteria [rare, valuable, costly to imitate, and non-substitutable] to determine if Coca Cola has competitive parity or temporary competitive advantage in the soft drink industry. The focus strategy is one of three generic strategies that Professor Porter created at the time: cost leadership, focus, and differentiation. Product differentiation occurs on two clear levels: vertical and horizontal. broad across-the-board: broad in scope or content; "across-the-board pay increases"; "an all-embracing definition";… This strategy is concentrated on a broader segment of the total market. As a product remains in the market for longer consumers become smarter about the prices and thus the premium charges being charged can no longer be sustained. Diversification is a form of corporate strategy designed to improve opportunities for growth and profitability. NRS 451VN Week 1 Assignment: Professional Resume and Cover Letter, NR510 Week 1: Barriers to Practice Discussion, Economic Growth and Education Level in China. Continued innovation and quality improvement a… The goal is to produce goods or services at the lowest possible cost by organizing every potential resource around the current production methods. On the other hand, there are disadvantages to using broad differentiation strategy, such as not meeting customers' expectations of unique offerings or setting a premium price that is too high. Advantages Of Product Differentiation. There could be small businesses or involved in a single business or a large, complex and diversified conglomerate with several different businesses. Types of Strategies – Cost Leadership ,Differentiation , Focus. Reference – Crafting & Executing Strategy by Thompson McGraw-Hill, 18th edition ISBN # 9780078112720, Your email address will not be published. Copyright © 2021 A+ Professional Essay Writing Services:- All rights reserved. Q4. As mentioned above, Porter suggested either of the three strategies to survive in a competitive business. Based on this information. A focused cost leadership strategy requires Companies can engage in diversification efforts by different means [mergers, acquisitions, joint ventures, strategic alliances, or international expansion]. Starbucks is also well known for quality products, with stringent guidelines outlining how their coffees are to be prepared, as detailed as espresso must be served within twenty-three seconds of brewing. Pursuing a differentiation strategy requires a larger financial investment from the company, another weakness. If the achieved selling price can at least equal (o… 2. His expectations in return are to retain employees (reducing training and turnover expenses) and generate revenue (through customer satisfaction). I am providing the latest information from the Coca Cola Co. Sara Lee’s Cookie Crumbles – 2 Business Units Survive, Starbucks – Pursues a Broad Differentiation Strategy. Remember, I have offered this set of essays for several years and I have been able to get a consistent perspective on what I am looking in the answers and with the rubric that I use, it is possible to assign a grade in about 10-15 minutes. advantages and disadvantages of differentiation strategy pdf. A strategy directed toward creating something that is perceived as being unique. This strategy is concentrated on a broader segment of the total market. Advantages and Disadvantages of Product Differentiation. Despite the stagnant growth in the industry, its leading brand, Coke, remains the market leader and it can be considere8i9d as a cash cow for the company. Losing the perceived customer quality differentiation is devastating to this strategy. The company must use only one out of three competitive strategies. They are well-positioned in the market with a plentiful amount of easy to access stores. This will help the company to survive and minimize the risk, but if the company does not choose one of three competitive strategies, then there would be a loss of resources. The big risk when using a differentiation strategy is that customers will not be willing to pay extra to obtain the unique features that a firm is trying to build its strategy around. Q1. The different factors on which the process is implemented include: Advantages and Disadvantages of Differentiation. Below are the disadvantages or risks of the broad differentiation strategy: Differentiating on an unimportant product feature that doesn't result in providing the best value to the customer; Too much differentiating the product like products' features exceed the customers’ needs; In this post I’m going to be focusing on differentiation, but it is important to understand why differentiation is a strategy and how it relates to competitive advantage. Please do the following, a) Discuss all the General Segments of the Environment and the Five Forces Model to analyze the external conditions affecting the Coca Cola Co in the US market. Corporate level strategy implies the notion of creating value by deciding in which businesses a company may compete. With this strategy, the objective is to become the lowest-cost producer in the industry. The product differentiation process may be as simple as redesigning of packaging to introducing a brand new functional feature in a product. Examples of Firms Pursuing a Differentiation Strategy ... strategy means that a firm is competing based on uniqueness rather than price and is seeking to attract a broad market (Porter, 1980). Additionally, a differentiation strategy relies on effective and productive human resources. Below we illustrated a few examples in relation to an often differentiated product – women’s handbag. A differentiation strategy offers important advantages and disadvantages for firms that adopt it. As editors of the Wiley Encyclopedia of Management 3e, Vol. Many consumers perceive the product as equivalent to alternative products offered in the marketplace at a lower price. Coleman camping equipment offers a good example.   In a differentiated classroom, teachers recognize that all students are different and require varied teaching methods to be successful. 3. Competitive Advantage cannot be fully understood by considering an organisation in general. Difficulty in the pricing of goods that are not new into the market. Buyer loyalty is … Focused cost leadership is the first of two focus strategies. Differentiation is the educational practice of modifying or adapting instruction, school materials, subject content, class projects, and assessment methods to better meet the needs of diverse learners. Once again, please read the questions carefully and use wisely the information placed below in the other items as you need to even time yourself (about 30 minutes per answer). Once determined, the strategy is categorized as one of the 5 Generic Competitive Strategies. Why is cost leadership potentially so important? Q1. To successfully employ this strategy, Starbucks provides differentiated quality and service in the coffee sales and shop industry while diversifying their offerings to include: a variety of coffee product sales outside their stores through partnership with PepsiCo, Starbucks brand liqueur through partnership with Jim Beam, food and merchandise sales, and other acquisitions such as Tazo tea. Cost Leadership and Differentiation. Cost leadership strategyis vulnerable to the risks, such as relying on scale or experience as entry barriers. The idea here is simple. Required fields are marked *. Starbucks strategy, combined with its unwillingness to compromise quality in any circumstances and passionate leadership under the direction of Howard Schultz, CEO, has Starbucks well positioned to remain profitable and a leader in this market niche. One of the main criticisms to the Resource Based View of the Firm is that companies cannot obtain sustainable competitive advantages because of competitor’s reactions and attacks that erode advantages depending on the market cycle [slow or fast] that the company is competing. Broad differentiation is a strategy that is applied across an industry, appealing to a broad range of shoppers. One weakness of using a differentiation strategy involves the challenge of changing the customer perception. Figure 5.10 image description: Executing a Differentiation Strategy. b) Choose the most appropriate one to recommend for the Coca Cola Company. Training programs must be comprehensive to support the customer service differentiation but can be expensive. There are several ways an organization can create a differentiation-based competitive advantage for a single product or the company as a whole. In 2007, department store Dillard’s stopped carrying men’s sportswear made by Nautica because the seafaring theme of Nautica’s brand had lost much of its cache among many men. b) Provide a summary of potential opportunities and threats to the Coca Cola Company as the current CEO will use your analysis to develop a new strategic management process for the company’s operations in the US. These are the target market (broad or narrow) and competitive advantage (low cost or differentiated). The Disadvantages of Differentiated Marketing. Cost declines with cumulative volume are by no means automatic, nor is reaping all available economies of scale achievable without significant attention. Company culture unique competitive advantage for a disadvantages of broad differentiation strategy product or the company must use one... Lee ’ s resources and capabilities Starbucks – Pursues a broad differentiation is devastating to this strategy, strategy. 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