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Evaluate these two strategies and recommend which one would be better to achieve global competitive advantage for a business, such as Cadbury - Edexcel - A-Level Business - Question 2 - 2018 - Paper 3
Question 2
Evaluate these two strategies and recommend which one would be better to achieve global competitive advantage for a business, such as Cadbury. Extract H Cost compe... show full transcript
Worked Solution & Example Answer:Evaluate these two strategies and recommend which one would be better to achieve global competitive advantage for a business, such as Cadbury - Edexcel - A-Level Business - Question 2 - 2018 - Paper 3
Step 1
Cost Competitiveness
Answer
Cadbury adopted strategies like Cocoa Life, emphasizing cost-saving measures through sustainable sourcing. This approach enables them to reduce costs, particularly in emerging markets like Ghana and India, where lower production costs can enhance competitive positioning. The outsourcing of production for certain chocolate bars also helps decrease expenses, allowing for more competitive pricing. Additionally, the modernization of their Birmingham factory with a £75m investment aims to improve efficiency, ensuring that Cadbury can maintain lower costs while scaling production, which may help them compete effectively against rivals.
Step 2
Product Differentiation
Answer
On the other hand, product differentiation focuses on unique qualities that set Cadbury apart from competitors. This involves building a strong brand reputation through CSR initiatives, such as promoting Fairtrade chocolate sourced from Ghana. By enhancing product quality and exploring diverse chocolate offerings, Cadbury can cater to discerning consumers willing to pay a premium for ethical and high-quality products. This strategy not only targets the premium market segment but also strengthens consumer loyalty and aligns with global trends towards sustainability.
Step 3
Recommendation
Answer
While both strategies hold merit, I recommend that Cadbury should prioritize product differentiation. This approach allows Cadbury to carve out a distinct market position amid intense competition, leveraging customer loyalty and ethical branding. As consumer preferences shift towards sustainability and quality, a strong differentiation strategy can lead to higher margins and a more resilient market presence. Furthermore, investing in higher-quality ingredients and ethical sourcing aligns with modern consumer values, potentially increasing market share in the long term.