LSM542: Strategic Positioning in Markets

Samuel Curtis Johnson Graduate School of Management, Cornell University

Sasha Lall

Strategic Positioning in Markets

Course Project

Part One – Two Basic Strategies (approx. 500 words)

Identify two firms, one that focuses on costs and the other that focuses on differentiation as its
main competitive weapon. One of the two firms you identify should be your own firm, if
possible. For each firm, write a brief description of what it does and how it maintains its
advantage. Include details like the firm’s industry, target market, and positioning strategy. Also
provide several examples of how that firm, through its decisions, defends against industry
threats.

- An example of a firm that uses Cost strategy, that is a situation where firms compete
heavily on price in the market, usually the cheapest product/service that is enticing for a
large group of consumers. An example of such a firm is Mcdonald’s. Mcdonald’s sells
food catering for the ‘mass market’ which is reflected on their cheap menus and their
wide variety of choices. It’s an industry leader in the fast food market because of the
competitive advantages it offers. Mcdonald’s offers its consumers convenience,
affordability as well as quality.A major strength of Mcdonalds is its ability to sell the final
goods/services (food) through low prices which encourages consumers. They’re able to
do this as Mcdonalds buy raw materials in bulks which results in the company to achieve
it’s economies of scale thereby passing it on to consumers through low cost prices.

However although, Mcondald uses the Cost strategy framework they are situations which arise
where competitors offer similar products even similar prices. Example of this are Wendy’s, who
like Mcdonalds offer fast food at low prices. Mcdonalds has been a household name for years
and you can find any mcdonald all across the globe, so from this Mcodnalds has already
established name and brand within the food industry.

Another firm that focusses on differentiation is L-mart Variety Store located in Guyana, South
America that targets a particular group of consumers(Niche Market) . It competes by using the
Vertical differentiation Strategy. Vertical Differentiation Strategy is where “firms offer
goods/services that stands out in quality.” Lmart began manufacturing furniture at its factory
using “nibi’, ‘wicker’ and ‘cane’ in their furniture. This gave them a competitive edge as they
were offering quality in the furniture and the durability of these furnitures seemed to last.
Although, the price for these goods were high, consumers still flocked at the quality and the
esthetically pleasing look the furniture gave. Lmart faced competition from Courts which was a
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 LSM542: Strategic Positioning in Markets
Samuel Curtis Johnson Graduate School of Management, Cornell University

popular Caribbean brand that sells everything from furniture to appliances. Courts offered hire
plan purchases and a wide array of payment plans whereas a firm as small as Lmart could not
afford to do. Although Courts furniture did not contain the durability that Lmart furniture
contained, the price was seen as more appealing to the mass market and the sales of Lmart
gradually went down.In order to compete, L-mart began strategizing to compete with Courts.
Lmart began to offer similar products with low prices, i.e their furniture they used to sell did not
contain the resources such as nibi, wicker-cane instead they substituted the natural raw
materials and used a different type of material for their furniture which in turn they were able
to sell at a lower cost. Lmart then began offering different products such as electronics. Lmart
adopted the Horizontal Strategy framework in order to survive its competitors.

Part Two – Rival Strategies (approx. 500 words)

1. Suppose you are about to enter a market in which Walmart is the dominant competitor.
What are some ways that you would consider attacking Walmart? That is, what aspects of
Walmart’s strategy might make it vulnerable? (In your response, do not simply repeat what was
discussed in the course already.) 

Some ways I would consider to attack Walmart is by deciphering what they lacked and make up
for it by implementing and introducing strategies to the firm just as Gimme! Coffee strategised
against Starbucks and was able to penetrate the coffee industry.
Some sacrifices Walmart had to make was their staff isn’t exactly ‘highly’ trained, infact in 2003
there was a situation where Walmart hired undocumented workers that resulted in a large
number of arrests and a settlement. In this scenario, as Walmart competitor I would pay
attention to the fact that they weren’t as highly trained and ensure we implement training
workshops and re-train staff till seemed fit.
Another disadvantage of Walmart is that the operations are deemed as ‘unfriendly’ for staff as
well. It is been said that Walmart shows little to no respect to its working force as is seen in the
healthcare coverage offered to its employees.
Many consumers like to shop in an atmosphere where employees are happy and willing to help
also, consumers support business that take into consideration their workforce.
Here is another where I would use their disadvantage to my advantage and offer better
payment, ensure their working conditions are up to standard for employees. I understand that
may be costly but in the long run it saves you from legal actions such as settlements.
Walmart is also famous for exploiting pregnant women as well as enforces child labour, for
Walmart most of their sacrifices where they lacked was an efficient work force. Although they
make up for it by offering the Lowest Prices through their wide array of selections that most
companies can’t seem to compete against due to their fascinating tracking and distribution
system.When there’s a Walmart constructing in a location, that location attracts other
businesses in the area bringing development. Due to the firm’s consistently growing, it is one
of the biggest private employer in the United States making it a pivotal company.

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 LSM542: Strategic Positioning in Markets
Samuel Curtis Johnson Graduate School of Management, Cornell University

To compete with a firm like Walmart where one of their main dilemmas are employee
mistreatment,( where this large firm too also uses child labour) and still an industry giant is
their ability to keep their costs low as seen with their workers, Walmart employees had
situations where they weren’t paid the right and full amount. For a firm competing against
Walmart they can start off by training staff, perform training workshops provide an
environment where employees thrive as well as they are fully aware of their job role. Also
because Walmart cuts the selling price which results in lowers its profit margin. Wamart may
have to depend on the volume of sales. The framework of Cost Strategy that Walmart uses
makes it easily identified and able to imitate.Lastly, Walmart is not able to compete against
high end speciality sellers as the sellers have the advantage in appealing and attracting new
customers. Walmart demonstrates it disadvantage to” innovative competitors” , as a firm
competing against Walmart and understands its disdvanatages in the innovative sector, I would
try to enter it. I would penetrate it by offering e-commerce like (amazon) store all my goods in a
warehouse and ship it just as Netflix gained its success and still keeping costs low. Due to the
low price your able to pass that off to customers and able to compete with Walmart “ELDA
Strategy (Everyday Low Price).

2. Consider the coffee drink market, which includes players like Starbucks, McDonald's, and
Dunkin’ Donuts. 

a. If you were advising McDonald's, what would you recommend it do in order to

compete with Starbucks? 

Inorder for Mcdonalds to compete against Starbucks I would identify their weakness
and use that to build from.From reading the lecture which highlights GimmeeCoffee
strategies against Starbucks that includes : “their staff were more highly trained, they
produced their beans in smaller quantities which resulted in better product than its
competitor Starbucks and lastly they heavily relied on the freshness of their products
were which was seen as a huge customer satisfaction where Starbucks was unable to
compete because their main strategies of “rapid expansion, rapid and efficient t service
could not been met. As a firm like Mcdonalds who too strategies reflect Starbucks, of
rapid and efficient service that led to both their companies success. To compete with a
firm like Starbucks, they may have to implement a wider selection, that is a wider menu
offering breakfast just as Starbucks offers as well as more. Mcdonalds may need to rely
heavily on product differentiation that is highlighting everything being offered, in
particular I would highlight the fact that with Mcdonalds ‘fries,drinks’ are usally included
in the purchase of a combo cutting out the cost of a drinks and fries. A company like
Mcdonalds is able to cut costs as they are able to achieve economies of scale as well as
they benefit by buying in bulk.

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 LSM542: Strategic Positioning in Markets
Samuel Curtis Johnson Graduate School of Management, Cornell University

b. If you were advising Starbucks, which competitor would you recommend it focus on:
McDonald's, Dunkin’ Donuts, or smaller shops like Gimme! Coffee? Why?

If I were advising Starbucks I would recommend it focus on Gimme! Coffee as

GimmeCoffee knows the weakness of Starbucks and was able to penetrate the coffee
market playing upon those weakness which made the end product seen to as ‘better
to some consumers. Starbucks is global name known worldwide, its’s known for its
prompt service, its efficiency and its rapid expansion model. However, Gimme Coffee
was not as large scale as Starbucks but they used the firm’s size to its advantage. In the
sense that Starbucks’ roasters were huge which resulted in the beans not being totally
roasted as their competitor had smaller roasters and providing quality beans. To
compete with a firm like Gimme Coffee they would have to change their entire
operations on goods /services what made them profitable in the first place. Their way
of rapid services which gained them entry in the market would have to redone in order
to compete with GimmeCoffee. The fact that there is a Starbucks in every major city,
Starbucks is a global brand and that has been one of its major success, as well as their
ability to be across countries offers its customers convenience wheras GimmeCoffee is
spread through New York , if GimmeCoffee petrudes other states making it a household
name and eventually bringing it other countries just as Starbucks that would be
detrimental on Starbucks part I believe and they need to focus and pay attention to
GimmeCoffee firm as even though they are not as large scale as Starbucks its still
attracting and appealing customers due to the product/services given, that is quality
beans.

Part Three – Strategic Trade-offs (approx. 500 words)

1. What takeaways do you have from the discussion of trade-offs? Note several key points.

The takeaways I gather from the discussion of trade-offs is it’s basically a situation
where a firm takes into account and ‘develop strategic positioning options’ that a firm
commits to inorder to increase sales. There are two concerns with this positioning as
once a firm establishes a position it gives other firms to opportunity to assess that

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 LSM542: Strategic Positioning in Markets
Samuel Curtis Johnson Graduate School of Management, Cornell University

particular firm strengths and weakness and the other concern may be the fact that
when establishing a position it may be difficult to change it. An example of a firm setting
its positioning is Zales. Zales targeted consumers who were ‘cost conscious’ that is low
to middle class market which they found their niche. However Zales decided to
reposition itself to target high end consumers which resulted negatively on Zales
because Zales had already established itself in the market targeting the low to middle
class and the products had a brand to be ‘budget friendly’ so consumers could not
differentiate the brand from being somewhat ‘low-middle end ‘ to high-end.

2. List several trade-offs faced by each of the following:

a) Dell 
b) Walmart
c) Car companies like Toyota that utilize platform sharing

Several trade-offs faced by each company beginning with Dell, dell was one of the
first companies to enter direct sales which changed the computer industry. It
invested in a collection of suppliers around its manufacturing headquarters that
allowed them to have rapid development ,low cost and direct sales which
customized to the likelihood to the consumer. However, there was a growing
demand for laptop computers as it was portable when compared to the desktop.
This became a problem as Dell was in Direct Sales and they had no retail outlets
neither retail partners so if consumers decided to buy a ‘dell laptop’ it wasn’t as easy
to find as multinational retailers like BestBuy did not carry it which resulted in a
decline in sales .

Walmart offers low cost which is one the reasons behind its success. However it
would be difficult for Walmart to offer different variety of goods because when a
offers more variety within a product category that makes it difficult to control the
inventory process which was the advantage of Walmart against its competitors.
Walmart also had limited expansion into new markets.

Car companies like Toyota that utilize platform sharing which is where a company
develops an underpinning of an automobile model that’s used to produce multiple
varitetie/models of cars. Its main advantage that it saves costs. However because of
platform sharing the automobiles may not be differentiated for consumers. A
consumer may not be willing to pay more for a particular model of vehicle when
they’re on built on the same underlining platform.

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 LSM542: Strategic Positioning in Markets
Samuel Curtis Johnson Graduate School of Management, Cornell University

Part Four – Consistency and Priorities (approx. 500 words)

1. What takeaways do you have about Gucci and strategy? List several key points.

During the 1980s, the ‘Gucci’ brand was going through turmoil which reflected poorly on their
sales. Gucci decided to ‘restore’ their brand they got rid of licensing,low quality products and
introduced expensive products and invested in extravagant expenses. However this ended up
to be a failure due to the fact their goods were not seen as rare or valuable and was easily
imitable did not gurantee the firm’s consistency. However when Tom Ford and Domenico De
Sole began to re-createe grand image, they began to see success. The strategies Tom Ford and
Domeinco De Sole used were new focus where they began to focus on customers who were
looking to change their waldrobes yearly Tom Ford added new collections making the brand
current and appealing, they also added more marketing targeting a younger crowd, they
lowered prices and lower costs. They also improved the appeal of the brand by improving the
interior and exterior of their store,they also began to focus on production aswell as the firm
had a flexible supply chain which contributed to the success of the brand.

2. No matter what industry you are in, the list of resources your firm would like to have is
probably longer than the list it can afford to acquire. Firms have to make a choice. Based on
what you have learned in this course, how would you determine which resources are the most
important for your firm to achieve or get?

In order for a firm to decide which resources are most important to them, they first need to assess
what resources (factors of production) they have available. Resources can be used in creating or
producing a good or service. Factors of production can range from land, capital, labour and
entrepreneurship. Land can be any natural resources that aids in production of goods/service.
Capital may consist of capital goods such as tools, machinery as well as human capital. Capital
goods can also include technological advancement. Labour refers to the idea of staff that are in
charge of production. Entrepreneurship refers to owners or the innovators in the production. All
above are examples of resources most firms utilizes to gain their final good or service. However,
in the 21st century you see may firms increasing its technology, as it increases efficiceny as well
as cut costs. I think a resource that would be important to any firm would be its technology as it
increases production as well as cut costs, there will be less mistakes made and done in a more
timely fashion which will result in more profits for the firm.

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