Blue Ridge Manufacturing
5-1 Blue Ridge Manufacturing
What is Blue Ridge’s Competitive Strategy?
In the beginning, the competitive strategy seems to be cost leadership with a focus on the southeast states. Manufacturing is done in a modernized plant which is recently upgraded. ABC costing is the choice for measuring manufacturing costs and management is committed to evolving the company’s accounting systems by bringing in more advanced manufacturing techniques. This shows that management aims to be more efficient for the large volume of goods it plans to produce. This aim for efficiency and large volume production is typical for cost leadership firms. Because the product is much like a commodity, unless Blue Ridge has exclusive rights from the sports teams, it is unlikely they are competing on differentiation.
Since the introduction of the new, non-toxic ink that will not wash out, Blue Ridge’s strategy changes to differentiation. Following the introduction of the modified product, the company planned to go national, which further shows its differential tendency. This does not necessarily mean it has switched to a full differentiation strategy, but it does present evidence that it is trying to differenciate from its competitors.
What type of cost system does Blue Ridge use? Is it consistent with their strategy?
Blue Ridge uses the ABC costing system, which is indeed consistent with the cost leadership strategy. It also assists the firm in identifying the most profitable customers, as the firm moves to a differentiation strategy based on quality and innovation.
Bibliography: Cost Management A Strategic Emphasis 5th Edition