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Changing from a Cost Leadership Strategy Into Differentiation
Nguyen Anh Tuan, MBA, Management Consultant, Viet Nam, Member
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I'm wondering how enterprises which have a cost leadership strategy turn into a differentiation strategy. Please advise. (...) Read more? Sign up for free
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Re: Changing from a Cost Leadership Strategy Into Differentiation
Ching Yang, Teacher, United Kingdom, Member
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Differentiation means doing things differently.
There is a common misunderstanding that differentiation means a different type of product or service. When a company does things differently, say like Toyota's just-in-time management. This helps Toyota manage its inventory and store cars more effectively than its competitors (basically when you compare a Toyota show room with it's competitors you will see a significant difference in the stock level and the resulting space used to store these cars).
So, in this case Toyota management of inventory is different from it's competitors.
But this change was brought about by Toyota in order to keep it's costs low - hence, why Toyota had to do "something" differently to achieve cost leadership. Another example is Walmart's SCM.
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