Any firm or company needs to lay down strategies for their course of action in the market which are in line with their growth plan. We can define strategy as a plan of the intended course of action in dealing with a given situation with an aim of achieving a particular objective. Some of the strategies that a business can use are differentiation and low-cost.
Low cost approach Strategy
The low-cost approach will also help the company in phasing out the image of any substitutes existing in the market. It will give an allowance for kudler to retain competitiveness against these substitutes due to the low focus given on product pricing done by on an inferior or a substitute that is low priced. The high margins in low-cost pricing will allow kudler to be able to absorb and withstand the increase in cost by suppliers and gain their trustworthiness in a given time period (Henry, Joseph, James, & Sumantra, 2003).
When kudler finds a prospect to have a low-cost strategy it has also to put into consideration if some major risks involved in this strategy are present so that they are able to maintain a continuous and unremitting growth. Some of the risks they may need to look into include that it is easy for other companies to imitate the cost saving strategy that they are using, which will also lead to similar results for both of them. Cost leadership is also another risk whereby kudler can be faced with pressure from its customers to lower its prices ((Henry, Joseph, James, & Sumantra, 2003). This can be a disadvantage to kudler and also to her competitors due to the reduced profit margin of the products. Continued cost cutting may shift the attention that kudler would give to differentiation of their products, improvement of the production process and may also affect their innovation. Due to the increased pressure to reduce their prices they may be pushed to use inferior raw materials in production affecting the originality of their products which is very much treasured by the customers. With time, the consumers get more knowledge about the products and also competitors come to know how to go about with the changes in costs and the overall number of products sold also decline. This shows that cost cuts cannot be used for a long period and they pose a big risk.
The other strategy which Kudler Fine food should try to use is the Umbrella Strategy which actually refers to a kind of strategy which enables a company to harmonize different views towards future development possibilities. An umbrella strategy therefore contains concrete goals, sources as well as assignments which are required for achieving the set organizational goals within the specific time frame. The operative business decisions are later executed within a particular logical framework that lies within the Umbrella strategy of the company. In this kind of strategy leadership is considered to be partial hence the leadership exercised doesn’t fully define strategic targets or boundaries within which others must usually follow. This actually implies that the strategies are partly deliberate as well as partly emergent. Hence in this kind of strategy Kudler Fine foods will use deliberately emergent leadership which purposefully allows the organization to be more flexible to maneuver and form patterns within the boundaries.
Evaluation of the strategies
The best strategy which Kudler should consider is Low cost approach, in which kudler will have to produce something that is unique and much valued by the consumer at a low cost. This will give provision for kudler to sell these products at a higher price given the fact that they are perceived to be of a higher value by the customers. In marketing when a consumer feels a product is of more value compared to other alternatives then the consumer becomes more motivated to pay additional cost for the product. In this case consumers of Kudler food products will be more willing to buy these products than other products. This will enable kudler to save more hence attaining more growth in the market compared to other competitors (Pearce & Robinson, 2009). The Umbrella strategy might be very important to Kudler but not effective as the low cost approach which can help Kudler to achieve its targets.
Structural, cultural, leadership considerations
Firstly Kudler can establish low-cost advantages that reduce the likelihood of pricing pressure from buyers. This implies that Kudler will be supposed implement low cost advantage by matching the prices through establishing prices that actually drives the other competitors out of the market. The other consideration which Kudler may use is through the use of truly sustained cost advantage that may help to push competitors into other areas of business reducing the levels of competition in the industry. Moreover, Kudler may consider using high product margin which allows the company to withstand high cost increases hence enabling it to gain supplier loyalty.
The fourth consideration is by Kudler positioning trade –offs that are very much important and essential to the strategy established. This is because such considerations actually create need for choice and purposefully limits what a company offers (Pearce & Robinson, 2009). This will help the company to reposition itself hence gaining more control over the market. The last consideration is through positioning of choices in which the choice will help Kudler to identify which activities a company will perform and how to effectively configure those activities. Additionally, this will help Kudler in achieving operational effectiveness as well as excellence in other activities (Pearce & Robinson, 2009).
- Henry, M., Joseph, L., James, B. Q & Sumantra, G. (2003). The Strategy Process: Concepts, Contexts, Cases, 4e. Prentice hall publishers.
- Pearce, A, J., & Robinson, R. (2009). Strategic Management. Formulation, Implementation, and Control. 11th ed. McGraw-hill publishers.