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Stockholm School of Economics Company of Foreign Business Program 2210, M. Sc. Thesis in Worldwide Business

Cost Leadership & Differentiation An investigation of the fundamental trade-off among Porter's cost leadership and differentiation strategies

Abstract

This thesis examines the fundamental trade-off between affordable and differentiation strategy for a business approach level. In 1980 Porter introduced a model of common strategies that has influenced much of the current pondering in approach formulation. Although Porter did not coin the terms, having been the first to go over the importance of selecting and centering on one of the 3 alternatives: 1 ) Cost leadership, 2 . Difference, and a few. Focus. Virtually any attempt to incorporate or reconcile strategies might result in firms becoming " stuck in the middle”, a bad strategic choice due to the presence of an inescapable trade-off. The dearth of recent research on the subject suggests that the initial debate has faded since the beginning of the 1990s, even though some talks still take place in strategy books and occasionally in the industry press. IKEA, McDonalds, Freebie southwest Airlines and Wal-Mart are examples of companies that are pointed out as having successfully reconciled both approaches. In order to investigate the question of the inevitable trade-off in general and the current express of fine art of the exploration topic in particular, a thorough materials review have been conducted. It can be accompanied by a cross-check examination of contemporary practitioners' position in the matter, that is, whether current experts principally assume that strategies will be mutually exclusive, or perhaps, reconcilable. Although the lack of a concise definition of the concept " mixed strategy” or " combination strategy” (or " combined strategy”) greatly slows research around the topic, both theory and practice support the existence of a trade-off.

Demonstration: March 16th 2007, 13. 15-15 (room C512) Expert: Author: Competitors: Patrick RegnГ©r Martina Minarik (19238) Agnes von Arbin Ahlander (19417), Golnaz Hashemzadeh Bayegi (19545)

Index

1 ) Introduction... ……………………………. ………………………………………………… 1 . 1 . How come this matter of interest? …………………………………………………….. 1 . installment payments on your Purpose…………………………………………………………………………… 1 . 3. Delimitations……………………………………………………………………... 1 . 4. Disposition. ………………………………………………………………………. 2 . Method……………………………………………………………………………………... 2 . 1 . Research design………………………………………………………………….. 2 . 2 . Data. ……………………………………………………………………………… 2 . three or more. Research quality. …………………………………………………………………. a few. Theoretical Structure... …………………... …………………………………………….... 3. 1 . What is technique? ……………….. …... …………………………………………… a few. 2 . The concept of " Strategic groups”……………………………………………….. several. 3. Porter. …………………………………………………………………………….. 5. Literature Review... ………………………………………………………………………… four. 1 . Conceptualisation of competitive strategies. …………………………………….. 4. installment payments on your Competitive strategy and market share.. …………………………………………. 4. 3. Combined strategy and gratification. ………………………………………………... 5. 4. Summarizing Table. ……………………………………………………………… 5. Selection interviews with Practitioners…... ………………………………………………………….. 5. 1 . Combined strategy and gratification. ………………………………………………... your five. 2 . Competitive strategy and market share. ………………………………………….. 5. three or more. Trade-off……………….. ………………………... ……………………………… 6. Analysis…………………………………………………………………………………….. six. 1 . Interpretation findings on the trade-off concern.. ……………………………………... six. 2 . Missing a definition of " merged strategy”…………………... ……………………. 6. several. Strategy versus Operational efficiency………………………………………………. 6. some. The author's word within the topic…………………………………………………... several. Conclusions………………………………………………………………………………… Appendix A………………………………………………………………………………… almost eight. Specification of sources & References……………………………………………………..

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1 . Launch

Cost command and difference strategies will be popular analysis topics within the field of strategy and get widely reviewed, in particular as Michael Assurer presented his model of universal strategies in 1980. A lot of rearchers, actually...

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