Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 30

Strategy, Auto Parts In the mid-1990s, a large retailer of auto parts, Best Parts, Inc. (BPI), was looking for ways to invest an accumulation of excess cash. BPI’s success was built on a carefully developed inventory control system that guaranteed the availability of a desired part on demand 99 percent of the time and within one business day for the remaining 1 percent. The speed and quality of service set BPI apart from other parts dealers, and the business continued to grow.

On the advice of close friends and consultants, BPI’s owner and CEO decided to invest a significant portion of the excess cash in a small chain of gift and craft stores in shopping malls.

Required Determine BPI’s competitive strategy (cost leadership or differentiation) in the auto-parts business. Assess whether this competitive advantage will or will not facilitate success in the new venture.

Step 1 of 2

Cost leadership is a strategy adopted by company where they sell products at lower price than the competition. Differentiator is a strategy where the company try to produce goods and services which are considered different and unique in some aspects in eyes of the customer.