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Pricing and Cost Leadership in Management Accounting - Essay Example

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Based on your background reading on this course and knowledge of other subjects, briefly explain the difference between "cost leadership" and "differentiation" strategies. Indicate which is the preferable strategy for this business, in your opinion.
It is irrefutable that business organizations are increasingly marketing their products more efficiently in order to pursue their quest of achieving higher market share and profits…
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Pricing and Cost Leadership in Management Accounting
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Download file to see previous pages In the company's situation, I believe that it will be better off pursuing a cost differentiation strategy which will allow it not to compete head-on with Starbucks that is directly on the opposite street. Starbucks is already an established player with an upscale clientele and serving the market through differentiation strategy. However, not all customers can patronize its products because of the high prices. Thus, the coffee outlet can offer specialty coffee products at lower prices which can be afforded by ordinary individuals. In this case, the company should be able to keep costs in check by employing the most efficient processes through the elimination of non-value adding activities. The company can make profit through the expected higher volume as consumers demand more of the products.
Identify a small number of areas (between 5-10) of important areas (referred to as critical success factors) for this coffee outlet. A critical success factor is an area in which performance must be at least satisfactory for the business to achieve its mission.
The success of the operation of the coffee outlet is dependent on a lot of factors. First, the company should be able to create an appropriate branding strategy which will make it stand out among other competitors. In the specialty coffee industry, branding strategy is very much important even in the mere survival of the business organization because it emphasizes the strength of the company as well as indicates what customers expect.
Next, the coffee outlet's brand image should be backed through the delivery of the image. For instance, since the company chooses to offer lowest prices, it should always conduct a market scanning in order to make sure that it is really offering the most competitive price.
Another success factor is the outlet's product quality. In a world where customers have become more discriminating have higher bargaining power, it is important that business organizations, ensure that they are offering high quality products. In addition to this, the coffee outlet should align its workforce with its staff. In delivering the intended image and good product quality, the staff should also be educated and adept in offering excellent customer service which will enhance the overall branding strategy of the firm. Service is very much significant to specialty coffee retailers and other players in the hospitality industry.
Next, the coffee outlet should also invest in having an atmosphere and ambiance where customers can sit back, relax, and socialize with friends recognizing that most coffee drinkers visit coffee shop in order to get away from the stressful office environment.
List different types of information that would be relevant in order to manage this business. Your information requirements can be either accounting or non-financial.
The management of the specialty coffee outlet should be based on an extensive and intensive market research which will help the business organization to pinpoint the most profitable market to be served. This will also enable them to tailor their products according ...Download file to see next pagesRead More
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