BSTD 2025 Term 1 Case Study - Grade 12Question 5: Business Strategies5.1 Explain Any ONE Type Of Intensive Strategy.5.2 Read The Case Study Below And Answer The Questions That Follow.KALAHARI GROUP (KG)With Hybrid And Electric Vehicles Becoming More
BSTD 2025 Term 1 Case Study - Grade 12: Business Strategies
In the ever-evolving business landscape, companies must adopt various strategies to stay competitive and achieve their goals. One such strategy is the intensive strategy, which involves a high level of investment and focus on a specific area to gain a competitive advantage. In this case study, we will explore one type of intensive strategy and analyze a real-world example of a company that has successfully implemented it.
5.1 Explain any ONE type of intensive strategy
Cost Leadership Strategy
A cost leadership strategy is a type of intensive strategy where a company focuses on reducing its costs to become the lowest-cost producer in the industry. This strategy involves streamlining operations, reducing waste, and improving efficiency to achieve lower costs. By doing so, the company can offer its products or services at a lower price than its competitors, making it more attractive to customers.
Key Characteristics of a Cost Leadership Strategy
- Low-cost production: The company focuses on reducing its production costs to become the lowest-cost producer in the industry.
- Efficient operations: The company streamlines its operations to eliminate waste and improve efficiency.
- Low prices: The company offers its products or services at a lower price than its competitors.
- High volume sales: The company aims to sell a large volume of products or services to make up for the lower prices.
Advantages of a Cost Leadership Strategy
- Competitive advantage: A cost leadership strategy can provide a company with a competitive advantage in the market.
- Increased market share: By offering lower prices, a company can attract more customers and increase its market share.
- Improved profitability: A cost leadership strategy can lead to improved profitability as the company sells more products or services at a lower price.
Disadvantages of a Cost Leadership Strategy
- Limited focus: A cost leadership strategy can limit a company's focus to a specific area, making it difficult to adapt to changes in the market.
- High initial investment: Implementing a cost leadership strategy can require a high initial investment in new technology, equipment, and training.
- Risk of commoditization: If a company becomes too focused on cost leadership, it may become commoditized, making it difficult to differentiate itself from competitors.
5.2 Read the case study below and answer the questions that follow.
Kalahari Group (KG)
The Kalahari Group (KG) is a leading manufacturer of hybrid and electric vehicles in South Africa. With the increasing demand for environmentally friendly vehicles, KG has been able to capitalize on this trend and establish itself as a major player in the industry.
Case Study Questions
- What type of intensive strategy has KG adopted to become a leading manufacturer of hybrid and electric vehicles?
- How has KG been able to reduce its costs and become the lowest-cost producer in the industry?
- What are the advantages and disadvantages of KG's cost leadership strategy?
- How has KG's cost leadership strategy impacted its market share and profitability?
Answering the Case Study Questions
1. What type of intensive strategy has KG adopted to become a leading manufacturer of hybrid and electric vehicles?
KG has adopted a cost leadership strategy to become a leading manufacturer of hybrid and electric vehicles. By focusing on reducing its costs and improving efficiency, KG has been able to offer its products at a lower price than its competitors.
2. How has KG been able to reduce its costs and become the lowest-cost producer in the industry?
KG has been able to reduce its costs by streamlining its operations, reducing waste, and improving efficiency. The company has also invested in new technology and equipment to improve its production process.
3. What are the advantages and disadvantages of KG's cost leadership strategy?
The advantages of KG's cost leadership strategy include its competitive advantage, increased market share, and improved profitability. However, the disadvantages include its limited focus, high initial investment, and risk of commoditization.
4. How has KG's cost leadership strategy impacted its market share and profitability?
KG's cost leadership strategy has had a significant impact on its market share and profitability. The company has been able to increase its market share by offering its products at a lower price than its competitors. Additionally, KG's improved profitability has enabled the company to invest in new technology and equipment to further improve its production process.
In conclusion, a cost leadership strategy is a type of intensive strategy that involves a high level of investment and focus on a specific area to gain a competitive advantage. By reducing its costs and improving efficiency, KG has been able to offer its products at a lower price than its competitors, making it more attractive to customers. While there are advantages and disadvantages to a cost leadership strategy, KG's approach has been successful in establishing the company as a leading manufacturer of hybrid and electric vehicles in South Africa.
BSTD 2025 Term 1 Case Study - Grade 12: Business Strategies
In our previous article, we explored the case study of Kalahari Group (KG), a leading manufacturer of hybrid and electric vehicles in South Africa. KG has adopted a cost leadership strategy to become a leading player in the industry. In this article, we will answer some frequently asked questions about the case study.
Q: What is a cost leadership strategy?
A cost leadership strategy is a type of intensive strategy where a company focuses on reducing its costs to become the lowest-cost producer in the industry. This strategy involves streamlining operations, reducing waste, and improving efficiency to achieve lower costs.
Q: How does a cost leadership strategy benefit a company?
A cost leadership strategy can benefit a company in several ways, including:
- Competitive advantage: By becoming the lowest-cost producer, a company can gain a competitive advantage in the market.
- Increased market share: By offering lower prices, a company can attract more customers and increase its market share.
- Improved profitability: A cost leadership strategy can lead to improved profitability as the company sells more products or services at a lower price.
Q: What are the key characteristics of a cost leadership strategy?
The key characteristics of a cost leadership strategy include:
- Low-cost production: The company focuses on reducing its production costs to become the lowest-cost producer in the industry.
- Efficient operations: The company streamlines its operations to eliminate waste and improve efficiency.
- Low prices: The company offers its products or services at a lower price than its competitors.
- High volume sales: The company aims to sell a large volume of products or services to make up for the lower prices.
Q: What are the advantages and disadvantages of a cost leadership strategy?
The advantages of a cost leadership strategy include:
- Competitive advantage: A cost leadership strategy can provide a company with a competitive advantage in the market.
- Increased market share: By offering lower prices, a company can attract more customers and increase its market share.
- Improved profitability: A cost leadership strategy can lead to improved profitability as the company sells more products or services at a lower price.
The disadvantages of a cost leadership strategy include:
- Limited focus: A cost leadership strategy can limit a company's focus to a specific area, making it difficult to adapt to changes in the market.
- High initial investment: Implementing a cost leadership strategy can require a high initial investment in new technology, equipment, and training.
- Risk of commoditization: If a company becomes too focused on cost leadership, it may become commoditized, making it difficult to differentiate itself from competitors.
Q: How has Kalahari Group (KG) implemented a cost leadership strategy?
KG has implemented a cost leadership strategy by:
- Streamlining operations: KG has streamlined its operations to eliminate waste and improve efficiency.
- Reducing costs: KG has reduced its costs by investing in new technology and equipment.
- Offering low prices: KG offers its products at a lower price than its competitors.
Q: What are the benefits of KG's cost leadership strategy?
The benefits of KG's cost leadership strategy include:
- Competitive advantage: KG has gained a competitive advantage in the market by becoming the lowest-cost producer.
- Increased market share: KG has increased its market share by offering lower prices.
- Improved profitability: KG's cost leadership strategy has led to improved profitability.
In conclusion, a cost leadership strategy is a type of intensive strategy that involves a high level of investment and focus on a specific area to gain a competitive advantage. By reducing its costs and improving efficiency, KG has been able to offer its products at a lower price than its competitors, making it more attractive to customers. While there are advantages and disadvantages to a cost leadership strategy, KG's approach has been successful in establishing the company as a leading manufacturer of hybrid and electric vehicles in South Africa.