Cost leadership - Grade: 8 PDF

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Executive summary The strategy which we are taking is Cost Leadership strategy. Cost leadership strategy is about to become a low-cost producer of services and products. In this we can use IT to reduce cost of business processes ,it also lowers the cost of suppliers and customers. Companies like ebay, Dell computer, Priceline and Mc Donald’s are mostly using this strategy all these companies uses cost leadership strategy to reduce the cost by using IT like ebay strategic use is online auction, dell computer strategic use is online build to order and priciline.com strategic use is online seller biding.

Table of content 

Companies names(ebay, dell computers, priceline.com)

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Company background

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Strategic use of IT

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Business benefits

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references

Company name: Dell computers Dells strategy/ background Dell's business strategy is a fruitful cost leadership strategy. The organization's recipe for progress has been founded on its remarkable customization, conveyance, and cost recommendation. In response to vacillating execution and the need to seek after new development openings, a double vital approach is required to stand up to quickly changing economic situations. To begin with, Dell must coordinate its cost leadership abilities with separated item include and related administrations to make an incentive for its clients and accomplish the advantages of an incorporated cost leadership/separation strategy. Furthermore, turning into an enhanced IT organization opens up circumstances in related organizations, where comparative items, purchasing forms, target clients, or other operationally-related exercises can deliver cooperative energies. These methodologies offer Dell a technique for managing the organization's focused substances. Business-Level Strategy Client desires in the business have made a developing interest for low-evaluated, separated items. Subsequently, Dell should have the capacity to perform essential and bolster exercises that at the same time yield low expenses and separated highlights, or a coordinated cost authority/separation procedure. The goal of utilizing this methodology is to productively deliver items with properties that lift item quality or execution. Effective creation is the wellspring of keeping up low expenses, while separation is the wellspring of special esteem.

Effective utilization of an incorporated cost initiative/separation technique has the additional advantage of building aptitudes that can enable Dell to adjust all the more rapidly to new innovations and fast changes in the outer condition. At the same time focusing on creating two wellsprings of upper hand (cost and separation) builds the quantity of essential and bolster exercises in which the organization must end up skilled, which adds to more prominent adaptability.

Flexible manufacturing frameworks, data systems, and total quality management frameworks can likewise yield a more flexible association. Each kind of activity ought to be considered by Dell as it tries to adjust the targets of persistent cost decreases and ceaseless item upgrades. Use of Information Technology to gain competitive advantage using Cost Leadership strategy •

Dell as of now uses an altered gathering process in view of a Flexible Manufacturing

Business (FMS) to take care of client orders. •

To increment adaptability, the organization should search for approaches to upgrade the

viability of data systems (connecting the inventory network through to the client) to enhance work process and correspondence among representatives to distinguish and resolve issues that rise. [Improvements in data linkages would demonstrate especially gainful as Dell tries to enhance administrations for its corporate customers.] •

Total quality management (TQM) is another administrative advancement that underlines

an association's total responsibility regarding the client and to consistent change of each procedure using information driven, critical thinking approaches in view of strengthening of representative gatherings and groups. The improvement and utilization of TQM frameworks at Dell would adjust activities to the organization's key needs and would simultaneously serve to (1) increment consumer loyalty, (2) cut costs, and (3) lessen the measure of time required to acquaint inventive items with the commercial center. These targets have been recognized as basic factors that will impact Dell's future achievement. TQM frameworks result in the improvement of imaginative capacities, the capacity to surpass clients' quality desires (separating the organization from its rivals), and the disposal of process wasteful aspects to cut costs (enabling Dell to offer better performing highlights at the generally low costs expected by its clients). iTherefore, a successful TQM framework will enable Dell to build up the adaptability expected to distinguish chances to actualize its coordinated cost administration/separation system. Since TQM frameworks are accessible to all contenders, they may enable the organization to keep up focused equality, however once in a while they will singularly prompt an upper hand.

Company name Coca-Cola Background of Coca-Cola The Coca-Cola Company has been an established trademark in the United States since 1886. Since then, the company has been able to differentiate themselves by being known as the world’s largest manufacture, distributor and marketer of non-alcoholic beverages and syrups. There are over 3000 products bearing their famous trademark that are now sold in more than 200 countries worldwide. The company tries to position its product in the manner that it stands out to be different from the products of the same category . The Coca-Cola Company spends enormous amounts of money in advertising to differentiate and create a unique image for their products. It provides different products to the customers and has been very much successful in gaining a leading position among the competitors. Cost Leadership in Coca Cola The organization tries to position its item less expensive than its rival and for this the organization tries to limit the cost of production. It oversees its working costs and deals with the flow of cash within organization. The investments are made in those zones, which appears to be productive to the organization. The organization likewise makes creation on a substantial scale with the goal that the working expense is low, and the clients additionally advantage from this. It turns into a win-win circumstance for both, clients, and the organization. Another triumphant factor of Coca-Cola is that it doesn't change its cost when it picks up popularity. It static value factor, for quite a long while, has helped the organization be a cost authority. Use of IT by Coca-Cola to support their strategy Inorder to gain control over Cost Leadership , Coca Cola uses IT for the followings purposes : 

Coca-Cola uses the power of social networking to spread the word concerning new products, test advertorial campaigns and associate Coca-Cola products with positive feelings

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IT has been used to have a good visibility of stock at the back of store. Through the technology , distribution systems is integrated to check exactly what’s happening with the products as they move through the supply chain. This system reduces the cost for managing the inventory manually .

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Coca-Cola introduced greener bottles and packaging in 2009, producing 2.5 billion of their products using less petroleum. So , the cost of purchasing petroleum may also be reduced by using this technology

Company name Ebay.com Company background: EBay is an international trading platform where people trade different items to each other. People use this to buy and sell different items like home furnishings, books, jewelry and watches, industrial products, musical instruments and toys for both children and adults etc. currently EBay has located sites which serves New Zeeland, China, Switzerland, Spain, Singapore, Australia, Canada, France and Germany etc. competitors of eBay are Amazon, Alibaba, Overstock and Rakuten. Strategic use of Information Technology: Ebay is using cost leadership strategy to reduce cost and maximize the profits it uses technology that minimize fixed and variable cost in worldwide business operations. Buyers and sellers are drawn to the online trade and auction trading platform based on attractive pricing strategies. There is an auction site which is Ioffer.com it claims that they buy and sell products easily they make offers to one another through IT. IT has increases the supplier power to buyers as well by a drop shipper which is possible through power of E-commerce. Drop shippers can generate money by listing products to merchants and forwarding the order to main suppliers. Ebay don’t pay for transport they have all online business so through IT there many other costs reduces because they provide many softwares to reduce cost . By adopting this system, eBay can increase its profit and revenue through new

channels with a continuous increase in its database. eBay is benefiting through increased productivity in both the organization and users, while it saves time and decreases costs. Business benefits 

Ebay solves shipping problem so it reduces cost for customers

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Option to auction

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Excellent SEO(search engine optimization)

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Lower fees

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Ebay offers seller flexibility

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Seller and buyer protection through IT

Reference http://javedaslam9.blogspot.com/2015/02/dell-cost-leadership-strategy.html

http://panmore.com/ebay-inc-generic-competitive-strategy-intensive-growth-strategies https://brainmass.com/business/porters-five-forces/coca-cola-porters-generic-strategies610123 https://www.ukessays.com/essays/business/dells-generic-strategy-business-essay.php http://www.123helpme.com/ebay-inc-case-analysis-view.asp?id=164732 https://www.cheshnotes.com/2017/07/coca-cola-generic-and-intensive-strategies/

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