Samsung Electronics study reveals that it possesses both 'cost leadership' and 'differentiation' advantages in the memory chip business. How is it possible for a manufacturer in a commodity business to achieve the same?
I would like to ask three questions:
1. What do you think are the underlying reasons for Samsung attaining both these advantages?
2. If Samsung is able to do it, why can't other firms achieve these advantages simultaneously? If you know any firm with both these advantages do share examples also.
3. If a firm possesses one of these advantages and wants to attain the other advantage simultaneously what route should it pursue?
Hoping to read your views on these issues soon...
Happy learning...
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3 comments:
In response to Question 1
In my view Samsung fist approached to take cost leadership position and to achieve this position, it tried to keep its product price low as compare to its competitors even it was below the production cost. this allowed Samsung to increase its supply and in return Samsung achieved improved product quality and later Samsung also improved not only product quality but also production process.
Simplifying production processes
Building efficient scale facilities
Tightly controlling production costs and overhead
In the next level when Samsung achieved the cost leadership position, it started to look into new products, simultaneously it started to look at the following major issues to gain Differentiation position
Developing new systems and processes
Developing Human Capital
Sustaining an Effective Organizational Culture
Changing Culture and Reengineering
Establishing Balanced Organizational Controls
Emphasizing Ethical Practices
And finally above mentioned points allowed Samsung to achieve “cost leadership” as well as “Differentiation”
In response to question 2
In auto industry Toyota has achieved both advantages (cost leadership and differentiation)
and in fast food industry McDonald is a good example.
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