One of the competitive realities of the market in the 21st century is that very few firms can succeed by emphasizing only cost or differentiation.

When considering the value chain tool developed by Michel Porter, it is important to remember that the capabilities in each activity have the goal of widening the profit margin whether by positively affecting the cost to produce a good or service or by the ability to differentiate a good or service from competitors’

offerings in ways that customers value, or both. Thus, it is important for firms pursuing differentiation to determine where costs can be cut without damaging the ability to meaningfully differentiate their good or service in ways that will allow them to sell products at a high price. Similarly, low-cost firms need to look for opportunities to add differentiation where they can without increasing average unit costs. In this exercise, you will examine the latter situation.

To complete this exercise, you should visit the firms involved.You are likely familiar with the firms listed below and you probably have some well-developed ideas about what each firm does to find some differentiation opportunities in a low-cost competitive environment. As the first step in this exercise, select one of the industries listed below and conduct the associated research Visit a Wendy’s, a Burger King, and a Hardee’s. Assess how each of these fast-food restaurants pursues differentiation elements as a key part of successfully implementing its cost leadership businesslevel strategy. Check your assumptions going in about the differentiation approaches of each restaurant. How have you changed them or added to them? After setting out the ways in which you see these firms differentiating their offerings and store presentations, assess and explain how and why these elements have the potential to help firms create value for customers