The other general category of competitive strategies is the low-cost strategy. In essence, companies can either compete to become the low-cost provider in an industry or take advantage of one of the many possible ways to differentiate themselves from competitors to drive business. Low Cost Limitations In general, much more room exists in most industries for differentiated business strategies than for low-cost strategies.
Apple then opened its own stores, in spite of protests by independent Apple retailers voicing cannibalization concerns. Apple continued their innovative streak with advancements in flat-panel LCDs for desktops in and improved notebooks in Time will tell whether that happens.
This allowed iTunes Music Store online to offer oversongs at introduction. Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation.
Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. Apple established a reputation as an innovator by offering an array of easy-to-use products that cover a broad range of segments.
However, its links with other firms have been limited, as we will discuss in the next section on strategic alliances. There is economic value in product differentiation, especially in the case of monopolistic competition.
The primary economic value of product differentiation comes from reducing environmental threats. The cost of product differentiation acts as a barrier to entry, thus reducing the threat of new entrants.
Not only does a company have to bear the cost of standard business, it also must bear the costs associated with overcoming the differentiation inherent in the incumbent. Since companies pursue niche markets, there is a reduced threat of rivalry among industry competitors.
If suppliers increase their prices, a company with a differentiated product can pass that cost to its customers, thus reducing the threat of suppliers. Since a company with a differentiated product competes as a quasi-monopoly in its market segment, there is a reduced threat of buyers.
A company attempts to make its strategy a sustained competitive advantage. For this to occur, a product differentiation strategy that is economically valuable must also be rare, difficult to imitate, and the company must have the organization to exploit this.
If there are fewer firms differentiating than the number required for perfect competition dynamics, the strategy is rare.
If there is no direct, easy duplication and there are no easy substitutes, the strategy is difficult to imitate. There are four primary organizing dilemmas when considering product differentiation as a strategy. They are as depicted below. To resolve these dilemmas, there must be an appropriate organization structure.
A U-Form organization resolves the inter-functional collaboration dilemma if there are product development and product management teams. Combining the old with the new resolves the connection to the past dilemma. Having a policy of experimentation and a tolerance for failure resolves the commitment to market vision dilemma.
Managerial freedom within broad decision-making guidelines will resolve the institutional control dilemma. Five leadership roles will facilitate the innovation process: The institutional leader creates the organizational infrastructure necessary for innovation.
This role also resolves disputes, particularly among the other leaders. The critic challenges investments, goals, and progress. The entrepreneur manages the innovative unit s.
The sponsor procures, advocates, and champions. The mentor coaches, counsels, and advises. Apple had issues within its organization.
To continue a product differentiation strategy, Apple must continue its appropriate management of innovation dilemmas and maintain the five leadership roles that facilitate the innovation process.
Strategic Alliances Apple has a history of shunning strategic alliances. Please give me a call. He felt that up-and-coming rival Sun Microsystems would overtake Apollo Computer, which did happen.
That never came to fruition, because Apple with Spindler as the CEO seemed contradictory and was extraordinarily difficult in business dealings.Apple has made product design a hallmark of its product differentiation strategy since the company's origins. When Apple introduced the iPod, iPhone, and iPad, there were no similar consumer electronics products that included so many features in one distinctive, iconic package.
And we can imagine what if Apple want to implement the two strategies, the differentiation which is the main strategy and cost leadership, I think the company will fail because to be cost. The broad differentiation generic strategy has significant implications on Apple’s strategic objectives.
For example, to effectively apply this generic strategy, the company must continue emphasizing innovation through research and development.
4 The Advantages of a Product Differentiation Strategy Differentiated business strategies are among the two basic types of competitive strategies companies can use to distinguish themselves in the. Apple has a multi-faceted differentiation strategy.
They are innovators who constantly push the limits of products and services, a strategy that is hugely successful. They are innovators who constantly push the limits of products and services, a strategy that is hugely successful.
Porter wrote in that strategy targets either cost leadership, differentiation, or focus. These are known as Porter's three generic strategies and can be applied to any size or form of business.