Ridgecrest Manufacturers exist in an automobile industry, which is endowed with the steeper competition due to the growing number of similar manufacturers of electric motors. In order to thrive in such a congested industry, strategy logic has to come into play. Ridgecrest 2015 plan is purely a cost leadership strategy rather than a differentiation strategy. Cost leadership strategy refers to a technique of reducing the operational cost and producing low-cost goods in an industry purposefully to a greater market share and defeats their rivals (Banker, et al., 2014). According to Michael Porter’s 7 generic strategies, a company can only emerge a market leader if it managers to provide high-quality products at the lowest cost than its rivals (Tanwar, 2013). The plan by the Ridgecrest to compete within the industry by selling high-quality motors at a cheaper cost can best work only if a number of tactics are considered and well implemented.
First, the 2015 plan success technically depends on the cost of raw materials. For Ridgecrest manufacturers to effectively achieve a cost leadership strategy there is a need to secure a cheaper source of raw materials, cheap labor, and use of efficient machines (Banker, et al., 2014). This will reduce the manufacturing cost and allow them to sell their motors at a relatively cheaper cost hence obtain a competitive advantage over the industry competitors. Secondly, by purchasing raw material in large volumes, the company is likely to benefit from the economies of scale hence enjoys a perfect discount. Lastly, quicker delivery of the ordered products to the clients is another plus towards achieving the cost leadership strategy of 2015. An expected measure from the Ridgecrest balance scorecard for 2015 plan is a gross increase in the number of monthly sales of motors. The increase would be a detrimental measure of positive achievement for the company hence an indication that despite their products dominate the market, and that a cost leadership competition plan was a viable strategy.
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References
Banker, D., R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision , 52 (5), 872-896.
Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management , 15 (1), 11-17.
