Strategic Planning For Focus And Cost Leadership

Cost Leadership as a Strategic Planning Approach

Discuss about the Strategic Planning for Focus and Cost Leadership.

In 1980, Michael Porter developed a model of basic approaches that has so far had an influence on current thinking in strategy formulation (Ries & Trout, 1986). He is the first individual to highlight the significance of opting for and concentrating on one of the three main alternatives, namely differentiation, focus, and cost leadership. Cost leadership is all about an organization getting ahead of the competition by lowering their operational costs beneath those of its rivals. Here, the organization strives to find ways of reducing costs in their organization so that they can offer products at the least possible cost than their rivals (Allen, 1977). According to WCS’s global head of consulting services, Kirk Strawser emphasized on the need for the organization to focus more on the company’s cost leadership.

By developing the WCS cost leadership, the organization would go very far in establishing its own identity, developing its own model for global delivery and committing resources to scale up. Because many customers prefer paying a lower price for their products and services, WCS can gain more audiences and become the cost leader in its industry (Abela, 2006). It might be argued that by lowering their costs, the organization will also lower the value of their products. This is not always true. Research has indicated that many organizations have so far had much victory fulfilling the responsibility as cost leaders while at the same time offering products that consumers desire and acknowledge.

One of the main benefits that WCS could enjoy when employing leadership in developing its own model for global delivery is that once they are recognized as a cost leader, it will be hard for new companies to enter the industry and be aggressive (Abela & Murphy, 2007). This is because they are more likely to be smaller and struggling to figure out lower operating costs and effectiveness. By engaging in cost leadership strategy, WCS will be seeking to bring together low per-unit profit with large scales to be profitable. A good illustration of an organization that has successfully implemented cost leadership is Wal-Mart, which has utilized this approach to grow into the largest organization globally. It is, therefore, important for WCS to take points from other successful organizations that have managed to use cost leadership to their advantage.

WCS was indeed focusing its strategy on branding and positioning, product differentiation from its rivals and competitors. Product differentiation simply refers to the creation of products that are unique, desirable, and different from its competitors. So far, WCS has concentrated on innovation in search of growth. Organizations that combine cost leadership and product differentiation, aim at luring potential customers (Porter, 1980). Employing cost leadership does not necessarily mean charging the minimum prices in the industry. It simply means charging low prices comparative to other organizations competing within the target market. Product differentiation, on the other hand, requires WCS offering special features that satisfy the demands of a narrow market (Ries & Trout, 1986). Some firms use product differentiation by focusing their efforts on specific sales channels, such as selling over the Internet only, while others target specific demographic groups. WCS are considering the implementation of higher-level advisory services to complement their IPO services and world-class IT, to meet their customers’ demands.

Benefits of Cost Leadership Strategy

There has been much discussion in the recent past about the significance of a positioning strategy being a component of the marketing plan. Product positioning is commonly utilized as a marketing communications tool to reach potential customers in an already crowded marketplace (Allen, 1977). Businesses that do not have enough resources aim at establishing a position in the market by pursuing numerous positioning strategies. WCS is currently uniquely positioned to assist clients in laying out the plan for capital effectiveness, strategic cost reduction, and improvement of customer experience in transformation related programs (Abela, 2006). The most appropriate positioning strategies tend to put emphasis on a company’s and product’s strengths, focusing less on weaknesses.

WCS has so far taken the necessary steps to establish its position in the industry. The organization has managed to identify its rivals in its market, learn as much about the rivals as possible, and determined how it might establish a distinct position based on its individual marketing attributes. In turn, WCS is now focusing on strengthening and establishing a brand identity designed to affirm that position within its industry (Abela & Murphy, 2007). It has also made an effort of influencing consumer perceptions based on price, distribution, product, and promotional components of the marketing mix. Branding requires ongoing efforts to pass on a consistent image to potential customers through all organizational activities, from product attributes to the organization’s service.

A global delivery model refers to the most favorable set of processes, quality procedures, and end-to-end methodologies, with resources and high value skills available externally or internally (Porter, 1980). This allows an organization to make the most of the value of their solutions while minimizing the general cost and delivery time of their IT services. By reexamining its global delivery model, WCS was in a better position of driving down costs and hastening implementation of strategic initiatives, and able to compete victoriously in the global economy. The company’s special client immediacy model providing for local resources to deliver the quick feedback and local accountability required for success is among its global delivery approach (Ries & Trout, 1986). WCS aims at engaging with potential customers who do not have transactional history with the organization.

Today, many marketers are experiencing difficult challenges while advocating for website and infrastructure across the world through one team. That is why it is important for companies such as WCS to maintain their websites optimally to ensure they are operational enough to offer better customer experience (Allen, 1977).  WCS was reexamining the global delivery model because though it functions effectively with the IT sector, complications tend to arise with the marketing teams, especially when customer experience must be enhanced by the hour. It also took into consideration the various steps involved in employing an effective global delivery model. Defining the engagement model is the initial step which allows an organization to develop flexibility (Abela, 2006).  It has proven to be quite successful given the right set of processes.

Marketing in today’s digital era requires integration with tools and competence in gathering information in addition to deriving insights. Reexamination of the global delivery model is quite significant in that it represents a global presence that enables WCS to react quickly to changing customer needs. Given the diverse workforce in many organizations global delivery model brings down cultural distinctions (Abela & Murphy, 2007). To this effect, WCS is planning on hiring young bright MBA graduates from top Indian business schools, offer them training for a year as analysts in India by referring them to consulting teams, and alternate them worldwide on live meeting.

To be successful in their engagement with potential customers who have no transactional history with WCS, the organization needs to come up with a strategy for long term perspective business relationships. Research has indicated that victorious organizations tend to spend more time with their clientele beyond the initial buying transactions, providing worth and establishing commitment and alignment (Porter, 1980). Furthermore, customers acknowledge knowing that an organization expects to be held accountable for their victory once the sale is complete. Notably, a salesperson’s inability to conduct business the way his/her customers want can destroy long term relationships. One of the main reasons why customers always come back for more of an organization’s products and/or services is because of their relationship with the organization.

Aiming to be close to their customers is the key strategy for long term perspective business relationships for WCS. Superiority before, during and after a sale requires long term approach which in turn results in continuity, understanding and trust (Ries & Trout, 1986). WCS needs to realize that when good service is experienced by its customers, they are more likely to conduct business with them again. Repeat business and referrals are a great way of enhancing an organization’s reputation and establishing a positive image when customer anticipations for services are met. Therefore, soon after the initial delivery has been made, WCS sales team should call to find out their customers are experiencing any issues with their products. Not only will these customers see that the organization is honest in its approach, but will also make them feel safe in terms of utilizing its products and services. WCS should make an effort of continuously improving its business in terms of speed to market, reduced costs, flexibility, and customer satisfaction and value.

References

Abela, A. (2006). “Marketing and consumerism.” European Journal of Marketing, 40 (1/2). Pp. 5 – 16.

Abela, A., & Murphy, P. (2007). “Marketing with integrity: Ethics and the service-dominant logic for marketing.” Journal of the Academy of Marketing Science, 36(1). Pp. 39 – 53.

Allen, T.J. (1977). Managing the flow of technology. Cambridge, MA: MIT Press.

Porter, M.E. (1980). Competitive advantage. New York: Free Press.

Ries, A., & Trout, J. (1986). Positioning: The battle for your mind. New York: McGraw-Hill.