TYPES OF BUSINESS STRATEGY

There are two types of business strategy

1.Cost leadership strategy:

  • Implementation of cost leadership strategy requires a low cost capital process, engineering skills of product design in such a manner that it is easy to manufacture them with low cost and distribute them at the lowest possible cost.
  • It also requires the system of a tight cost control, a detailed analysis in terms of controlled reports and incentives based on meeting strict quantitative target.
  • The cost leaders basically concentrate on a single or a few related products and have minimum hierarchy level for better coordination, this type of cost leadership strategy requires minimum expenditure on R&D activities.

2.Differentiation strategy:

  • For implementation of differential strategy an organisation requires strong capability and major investment in basic research, having product engineering skill, strong marketing capability and a reputation for quality and technological leadership.
  • There should be repo. Developed between R&D departments and marketing department.
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