Cassidy Hanley
Ch.5 Case Study
1. Blue Ridge’s current competitive strategy, without the introduction of the new ink and
higher quality towel, is a focused cost leadership strategy. A focused cost leadership
strategy is one in which a firm establishes a competitive advantage by producing
products and/or services at the lowest cost in its industry to a niche market. Because
most of Blue Ridge’s sales and customers come from the southeastern states, it has a
focus strategy. In addition, Blue Ridge’s commitment to adopting advanced
manufacturing techniques, introduction and use of an ABC system, and upgraded
facilities, suggests that Blue Ridge is committed to increasing its efficiency, accurately
costing its products, having low costs. Because those are characteristics of a cost
leadership strategy, Blue Ridge also has a cost leadership strategy.
It appears as though Blue Ridge’s competitive strategy is likely to change in the near
future with the possible introduction of a new better-quality ink and towel. Blue Ridge
has recently developed a high-quality ink that stick and soaks into the towels better.
With this new ink, Blue Ridge is considering upgrading to a higher quality towel. Higher
quality products mean higher costs for the company. Because of this, Blue Ridge would
no longer have a focused cost leadership strategy. Instead, it would have a focused
differentiation strategy. A differentiation strategy is one in which a firm establishes a
