Business Strategy -401 (Final Exam)

Q2

TATA Motors***

Ans: According to above information TATA NANO follows a “low cost provider
strategy”. Successful low cost leader are exceptionally good they provide
customer “more value for the money”

Advantage:

I. Price competition is vigorous

II. Product is standardized
III. Buyers have bargaining power, so obviously customers will look for lower
price. As I previously explained TATA NANO is low cost provider. So
most of the customer who are looking for lower cost products will
definitely go for TATA NANO.
IV. Switching cost for buyers are lower.
V. As NANO is providing low cost car it will attract more customer.

Pitfalls:

I. Low cost method is easily imitated by the rivals.

II. Buyers interest is additional features
III. Buyers might not rely on the product
IV. Might not use all technologies because it is not possible to cost cutting
every features
Q3 a)

*** What are the 5 generic competitive models?

Type of Competitive

Overall low-cost Broad

provider Differentiation
Target Market

Best cost
provider

Focused
Focus low cost
differentiation

Rolex----Focused differentiation

Wal-Mart---Low cost provider

Lexus---Best cost Provider

ROLEX ---Focused Differentiation

Advantage

1. As Rolex is in focused differentiation in 5 generic model it focus on narrow

rich market.
2. Here narrow rich are the luxurious customer.
3. Buyers need and reference are different.
 Ex: They want luxurious watch rather than featured watch.
4. So Rolex always want to make their watches to attract their targeted
customer.
5. Rolex also takes order for making customized watch, this is because their
job is to fulfill demands of high class customer.
EX: Shah Rukh Khan, Tom cruise

Pitfalls:

 Market share is very low EX: Is Bangladesh there are very low, people who
can afford Rolex watch
 They cannot give a showroom in a 3rd world country
 If they want to make a new product they have to be very much careful about
the product weather the product adapted by customer or not because if they
failed there will be a huge loss as their all products are very expensive.

Wal-Mart---Low cost provider

Advantage

1. They offer low overall cost the competitor

2. They always try to keep their cost low as much as pssible
3. They try to give better product art low price
4. Since are providing product at they can sustan longer in the market

Pitfalls:

 It is tough to maintain their ware house as they have millions of product.

 Their maintain cost is higher as they have to recruit higher member of
employees and huge stores.
Lexus---Best cost Provider

Advantage

1. They are providing same standard product like BMW MERCEDEZ AUD
but with a lower price
EX: the price of BMW 5 serises is ! core 40 lakh taka where ase TOYOTA
LEXUS is offering the same standred car at 10 lakh taka only
2. They are providing only limited ammount of product rather than going for
huge range of product and offering best value to their customer

Pitfalls:

 The parts are not avaiable everywhere

 The maintainace cost is little but higher
 Aas it is a luxrious car it consumes higher ammount of fuel.