What organizational costs are there of differentiation strategies that do not exist for enterprises that pursue low-cost strategies? Why do they arise?

Question

What will be an ideal response?

Answer 1

? Reputation
? Innovativeness
? Internal organisation (“enterprise architecture”)
? External relationships (“contextual architecture”)
Since reputation is a key facet of distinctiveness, high calibre communication and support services
are necessary. Hence there is a need for a higher proportion of staff in differentiation-oriented
enterprises to be well-trained in all aspects of the enterprise, and motivated to deliver exceptional
service, especially in client-facing roles. These people are typically going to be relatively well-paid,
raising labour input costs. The extent of costs arising from the need for innovativeness may be
enterprise-specific, so that few generalisations are possible. This may be true of architecture too, but
when distinctiveness is critical, complex and nuanced organizational structures and external
relationships will normally be observed. Whilst these relationships may be effective (in the sense
that they achieve and sustain the desired, distinctive qualities), they are not necessarily efficient,
perhaps involving unavoidable duplication of effort. For example, narrow client segmentation may
require a greater number of well-remunerated sales and marketing staff performing apparently
similar tasks than would be the case in a low cost enterprise. Economies of scope may still exist,
however.