BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -if a firm has a successful differentiation strategy, it is not necessary to attain parity on cost. One potential pitfall of a differentiation strategy is that a brand’s identification in the marketplace may become diluted through excessive product line extensions.

Detailed explanation-2: -Successful use of a differentiation strategy depends on not only offering unique features but also communicating the value of these features to potential customers. As a result, advertising in general and brand building in particular are important to this strategy.

Detailed explanation-3: -Yes, a company or business unit can follow a cost leadership strategy and a differentiation strategy simultaneously. If a firm is concentrating on applying both business strategies simultaneously, it helps in gaining diverse benefits like premium prices and lower costs at the same time.

Detailed explanation-4: -If a firm can achieve cost leadership and differentiation simultaneously, the benefits are great because differentiation leads to premium prices, and at the same time that cost leadership implies lower costs. An example of a firm that has achieved success in both a cost advantage and differentiation is McDonald.

Detailed explanation-5: -Differentiation strategy is built on a belief that one needs a clear and unique positioning. Differentiation leadership focuses in providing perks that add value for consumers, while higher prices are a sort of “make up” for their higher costs.