In order to compete in the market where they compete, the companies

looking for a way to stand out from the others and for that they adopt
strategies.
Cost Leadership Strategy
This strategy consist, essentially, to try to lower the costs of the company
not only in its operations but also in all value chain by eliminating costs that
generate low value for the client. The low cost strategies seek to gain the
competitive advantage from competitors in two ways. The first one has the
purpose to attract as many customers as possible by reducing the price
offered, following the achieved cost reductions, this strategy reduces profit
margins and in the other hand increase sales and increasing the market
share. The second one aims to increase profit margins by reducing costs and
maintaining the prices offered and the market share. In order to ensure cost
advantage is necessary to accomplish the processes as efficiently as
possible, achieving the maximum amount of products or services with the
least possible resources by reducing total costs. To this end, the company
should be able to cut costs in all possible without ever damage the services
or product features that customers consider as essential.
Differentiation Strategy
This strategy is only achieved when a company can differentiate itself from
competitors by offering something unique appreciated by its customers
which will make buyers prefer your product. Thus, for the differentiation to
be successful, we must to find ways to create value that its difficult to copy
by the competition. Do not spend more than necessary in their production
and charge a Premium price and with that achieving differentiation. In this
way the company can make the customers loyal to your brand.
There are several approaches to achieving an advantage by differentiation

Add features to products that make more economical as the cost of

handling.
Increase the performance of products to buyers.
Incorporate features to products in order to increase customer

satisfaction in non-economic and intangible aspects.

Compete based on superior capabilities.

In the year of 1955, Mr Lopes da Silva was founded ELP after he put an end
to a relationship with a multinational where he was holding a prestigious
position of General Manager.
On a trip to Alentejo, the Mr.Silva decided to invest in the production of
cheese with hiring staff with expertise in traditional cheese production and
establish agreements with local milk suppliers. Although the production and
sales are going well, the Mr.Lopes da Silva thought he could do better and so
decided to consult a consultant to reavalue the entire business.

The ELP (EcoLacteous Products) is a company founded by Mr.Lopes da Silva

that performs the production of cheese. This company adopt a
differentiation strategy since the objective of Mr.Lopes da Silva is to avoid
being one more player with a standard product in the market, producing a
high quality product that inserts into the premium market. The package was
also different from the competition since it was made of ceramics that
contained a label with the information about the product.
For the production of cheese, the company decided to hire staff with
expertise in traditional cheese production and established agreements with
milk from local suppliers.
However, despite all the efforts to differentiate their product with a high
investment in promoting the product, the company has concluded that the
quality of their cheese was not so consistent due to lack of control on the
raw materials. To solve this problem, ELP decided acquire its own source of
raw materials, investing in new infrastructures for sheep breeding and own
collection of milk. Through these decisions, the company began to control of
their inputs, making it self-efficient.
With this strategic change, the product was then positioned in a higher level
of pricing and with this the company was able to put their products in all
distributions channels, such as gourmet shops as well as the large
distribution sector (ex: El Corte Ingles).
After that, ELP saw an opportunity to entry in the butter market since in this
market there is no brand loyalty. As they had no capabilities to produce, the
company opted for an outsourcing strategy by hiring a Spanish company
that produced high-quality butter. ELP adopted the same method for the
butter packaging as the one being used for cheese (ceramic container with
description of traditional handcraft production method). The positioning was

also the same as for the cheese that is the average to high end consumer
segment.

he company was in a good moment but Mr. Lopes da Silva thought he could
do better and then decided to invite a consultancy firm to revalue the
business model. With this advice, the company concluded that the quality of
the cheese was not so consistent and this factor has become a negative in
negotiations with hypermarkets and supermarkets.
With this, the company optou pela criao de ovelhas, purchased a large
number of noble breed of White Merina sheep and rented a large propriety
for pasture so that he can ensure the animals would have the most natural
pasture (wild grass and windflower). He believe that by guaranteeing the
consistency of the quality of milk then he could control the final quality of
the cheese. This decision has forced ELP to a considerable financial effort
which was only made possible with sharing the equity with a trading group
from Portalegre. And with this investment, ELP built new production
infrastructures such as new area for milking so that the milk processing
becomes a daily operation.
The company has also changed the packaging of the product. This new
package is made of ceramic (a small pot with a cap). The advantage of this
is that can be re-use the container after the consumption of the cheese.
This company adopt a differentiation strategy. Your business is placed in the
premium cheese