Cost leadership or differentiation: strategies for a Finnish lighting small enterprise
Polus, Errol (2022)
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2022060113949
https://urn.fi/URN:NBN:fi:amk-2022060113949
Tiivistelmä
Business strategy is important to the success of any firm. The strategic management process aims to help firms identify what resources and capabilities they can focus on to create competitive advantages in future decision-making based on their current business environment. It provides the tools, for example, if a firm decides whether they want to differentiate or become cost-leaders in a particular industry. The key to formulating a good business strategy is under-standing the external business environment and a firm’s internal resources and capabilities. This will help decide if a business should focus on business level strategies like cost leadership or differentiation.
This thesis is commissioned by Cerbelux Oy, a small lighting enterprise in Hämeenlinna, Finland. They sell lighting components, luminaires, and lighting designs. The aim is to give guidance to Cerbelux Oy in future strategic decision making as the firm transitions from outdated component sales to modern LEDs, luminaires, and lighting design sales.
The research was based on interviews with employees at Cerbelux Oy. The initial interview was to find information for further research on the company’s external opportunities and threats, incorporating the information from interviews in the PESTEL analysis to understand the external factors that are affecting the firm. The second interview was based on Porter’s value chain analysis to build an understanding of the resources and capabilities of the firm as this is the ba-sis for the internal analysis. The thesis uses a value chain analysis as the internal analysis. It looks at the primary and support activities involved in the firm when sell lighting designs and components. Both analyses were then used to find Cerbelux Oy’s strengths, weaknesses, opportunities, and threats, forming a SWOT matrix.
Finally, based on the SWOT matrix the thesis determines what business level strategies to recommend, such as cost leadership or differentiation. The thesis recommends the company differentiate their offering via utilization of new technology in their lighting business because it best matches their strength as an agile company and meets a clear technological opportunity in the business environment. However, the thesis provides focused cost leadership as an alternative business level strategy if the company finds differentiation to be too costly.
This thesis is commissioned by Cerbelux Oy, a small lighting enterprise in Hämeenlinna, Finland. They sell lighting components, luminaires, and lighting designs. The aim is to give guidance to Cerbelux Oy in future strategic decision making as the firm transitions from outdated component sales to modern LEDs, luminaires, and lighting design sales.
The research was based on interviews with employees at Cerbelux Oy. The initial interview was to find information for further research on the company’s external opportunities and threats, incorporating the information from interviews in the PESTEL analysis to understand the external factors that are affecting the firm. The second interview was based on Porter’s value chain analysis to build an understanding of the resources and capabilities of the firm as this is the ba-sis for the internal analysis. The thesis uses a value chain analysis as the internal analysis. It looks at the primary and support activities involved in the firm when sell lighting designs and components. Both analyses were then used to find Cerbelux Oy’s strengths, weaknesses, opportunities, and threats, forming a SWOT matrix.
Finally, based on the SWOT matrix the thesis determines what business level strategies to recommend, such as cost leadership or differentiation. The thesis recommends the company differentiate their offering via utilization of new technology in their lighting business because it best matches their strength as an agile company and meets a clear technological opportunity in the business environment. However, the thesis provides focused cost leadership as an alternative business level strategy if the company finds differentiation to be too costly.