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Please review - analsysis of the issue

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Status: Impossible is not a fact. It's an opinion. It's a dare. Impossible is nothing.
Affiliations: University of Chicago Booth School of Business
Joined: 26 Nov 2009
Posts: 954

Kudos [?]: 922 [0], given: 36

Location: Singapore
Concentration: General Management, Finance
Schools: Chicago Booth - Class of 2015
GMAT ToolKit User
Please review - analsysis of the issue [#permalink]

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New post 07 Oct 2010, 00:50

“Since no business can be all things at once, companies that specialize in one product or service are more efficient than those that offer a diverse product mix.”

From your perspective, how accurate is the above statement? Support your position with reasons and/or examples from your own experience, observations, or reading.

I agree with the speaker that the companies who specialize in one product of service are more efficient.

The first reason for my belief is that the companies that specialize in their product had to brand the product carefully. For example take the example of the BMW M3 series. The product is specialized and targeted at the young people who love to drive a muscle car and get a feel of the Formula I class driving. Only a specialized company is in a better position to brand and market the product carefully.

The second reason for my belief is that branding is a technique which is highly useful when the competitor is usually selling a similar product at the competitive price wherein even a miniscule amount can affect the sales. In order to dominate the market the company has to keep the prices a bit lower than those of the competitors and popularize the brand image adequately. A specialized company is capable of branding the services very efficiently and targeting the clientele effectively for maximum profits.

There are companies in the market that sell a diverse product mix and are successful. An example is the Walmart. However it is known that Walmart is able to keep its prices because of the market dominance and factors such as the strategic location of the store. Had it been a small store with chains in just some cities, then Walmart couldn't be successful just by increasing the variety of the products. On the other hand, choice do little to change the customer’s mind. If a customer plans to buy a M3 series BMW or Mercedes CLK then he will be concerned about this car only.

Perhaps the best reason for my belief is that companies who specialize in their product hires people who specialize in selling the similar product from the competitors. The need to hire the specialized skill raises the bar for production efficiencies and thereby improving the product fueled by ideas from the competitor's. Sometimes it is seen that the copyrights and patents prohibit the use of the same technology other than the originator's firm. In such cases benchmarking the process efficiencies against the competitor will go a long way in improving the product.

In the final analysis, I believe that the companies who have specialized product knowledge are more efficient than the companies who sell product mix because of the marketing need to image a brand and in the fight for market dominance have to keep the high standards for the products. Hence the specialized companies are conclusively more efficient.

Kudos [?]: 922 [0], given: 36

Please review - analsysis of the issue   [#permalink] 07 Oct 2010, 00:50
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Please review - analsysis of the issue

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