Comparative Study between Cost Leadership Strategy and Differentiation Strategy on Company Profitability/Market Share: Case Study Apple and Nokia

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ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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ABSTRACT

In this research study the comparative study between Cost leadership strategy and differentiation strategy on company profitability/market share by comparing the case studies of Apple and Nokia has been done. The mixed methodology has been used, in that qualitative, quantitative, secondary, and the case study methodology have been used in this research study. Interviews have been conducted from the customers and the employees of the companies. In the quantitative research method, the survey method has been used; in the survey method the person administration survey and self administration survey method have been used.

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

ABSTRACTiv

CHAPTER 1: INTRODUCTION1

Cost leadership strategy1

Benefits Cost leadership strategy1

Disadvantages Cost leadership strategy2

Differentiation Strategy2

Advantages of Differentiation4

Disadvantages of Differentiation4

Background of Apple4

Background of Nokia5

H15

H25

Aims and objectives6

Significance6

Research Questions6

CHAPTER 2: LITERATURE REVIEW I7

Sector Overview7

Competitive Advantage of Apple8

Recent Developments and Prospects of Development9

Competitive Advantage of Nokia10

Competitive Strategies Influence Profitability and Market Share11

CHAPTER 3: LITERATURE REVIEW II13

Marketing Theories & Strategies13

Competitive Strategies13

Differentiation strategy14

Risks of Differentiation16

The Theory of Michael Porter16

1.Threat of new competitors in the industry16

2.Threat of Substitutes in the market for products and services17

3.Bargaining power of buyers17

4.Bargaining power of suppliers17

5.Rivalry among competitors17

Cost Leadership Strategy18

Positioning - low cost strategy18

Supplier and partner relationships drive low cost strategy19

Cost leadership strategy considerations19

Ways of implementing a cost leadership strategy19

Risks of Cost Leadership20

Conceptual Framework21

Implementing Strategies21

Analyzing and comparing22

Figure 1: Conceptual Framework CHAPTER 4: METHODOLOGY22

CHAPTER 4: METHODOLOGY23

Research Design23

Secondary and Qualitative Methodology23

Quantitative Research Method24

Case Study Method24

Literature Search25

Reliability& Validity of Sources25

Limitation of Research27

Ethical Considerations27

REFERENCES29

CHAPTER 1: INTRODUCTION

Cost leadership strategy

Cost leadership describes the strategy of a company, by declining the cost to gain the competitive advantage. According to Porter, a company can generate profits when all other competitive companies have fallen into the red zone. In order to achieve this goal the company has to adopt different strategies as described by Porter. This is a low cost producer strategy, and this strategy requires a company to sell its products either an average selling price for earning higher profits than its competitors or for gaining the market share a company must sell the product below the average industry prices. This strategy normally targets the broad market (Porter, 2006, 33).

For attaining the cost advantages, the company can improve the efficiency of the process, attain access in a unique way the large source low cost materials. The company can do outsourcing in a best possible way and take decisions of vertical integration, or take decisions on the avoidance of the cost (Naumann, 2004, 75). In order to be competitive in the international market the ...