MNM3709 ASSIGNMENT 3 (COMPLETE ANSWERS) SEMESTER 2 2024 - DUE 1 OCTOBER 2024
QUESTION 1
Porter’s model identifies three main generic strategies for creating competitive
advantage: cost leadership, differentiation, and focus. Each strategy allows companies
to leverage their strengths and outperform competitors by optimizing cost, enhancing
unique offerings, or targeting specific market segments. Below, we evaluate these
strategies with practical examples of how OBC Chicken and Meat has used them to
establish a sustainable competitive advantage.
Cost Leadership
Cost leadership involves becoming the lowest-cost producer in an industry, enabling
the company to offer products at lower prices than competitors while maintaining
profitability. OBC Chicken and Meat exemplifies this strategy by maintaining a low-
cost structure through bulk purchasing, efficient supply chains, and optimized
distribution centers. These practices allow OBC to offer competitively priced meat and
chicken products that attract budget-conscious consumers, particularly in lower Living
Standards Measure (LSM) market segments (Wiid et al., 2020).
Differentiation
Differentiation focuses on creating products or services that are perceived as unique
by consumers. OBC has implemented this strategy by maintaining high standards in
store cleanliness, advanced refrigeration technology, and excellent customer service.
The brand has also expanded its product range to include fish, processed meats, and
dairy, providing a unique shopping experience for customers who associate OBC with
quality and freshness. This differentiation approach has allowed OBC to build a strong
brand identity, recognized as “Ekhaya Lenkukhu” (The home of chicken) (Wiid et al.,
2024).
Focus Strategy
The focus strategy involves targeting a specific niche or market segment and tailoring
products or services to meet the needs of that particular group. OBC employs this
strategy by concentrating on the lower-income consumer market, particularly in
townships, commuter zones, and city centers. By strategically positioning stores near
transport hubs and catering to the needs of mass-market commuters, OBC has
effectively captured a loyal customer base that values affordability and convenience
, MNM3709 ASSIGNMENT 3 (COMPLETE ANSWERS) SEMESTER 2 2024 - DUE 1 OCTOBER 2024
(Wiid et al., 2020). This targeted approach ensures OBC’s relevance and
competitiveness within its chosen market segment.
Conclusion
OBC Chicken and Meat has successfully used a combination of Porter’s generic
strategies, particularly cost leadership and focus, to build a sustainable competitive
advantage. Through cost efficiency, differentiation in product offerings, and a targeted
approach to market positioning, OBC continues to grow and maintain its status as a
leading player in the South African retail sector. This strategic blend allows OBC to
meet the everyday needs of ordinary South Africans while staying resilient in a
competitive market environment.
QUESTION 2
Product development strategies are essential for companies to adapt to changing
customer needs and preferences. Wiid et al. (2020; 2024) outline various strategies,
such as improving existing products, extending product lines, introducing new
innovations, and adding compatible products. Each strategy allows companies like
OBC Chicken and Meat to stay competitive and meet the evolving demands of their
customers. This evaluation explores how OBC can apply these strategies and
identifies the most suitable option for the company’s growth.
Improving Existing Products
This strategy involves enhancing the attributes of current products to meet customer
demands. OBC Chicken and Meat can improve its existing chicken product lines by
offering healthier, organic, or free-range chicken options. As consumers increasingly
seek healthier and ethically sourced food, improving the nutritional value or ethical
standards of their chicken products could meet these preferences.
Example: OBC can introduce an organic, hormone-free chicken option, appealing to
health-conscious consumers.
Product Line Extension
Product line extension refers to expanding the current product range by offering new
versions or varieties. OBC can introduce new products within their existing category,
