Leveraging Logistics Core Competence for Competitive Advantage in Commodity Markets: A New Zealand Case Study

Gabrielle Peko, University of Auckland
M Daud Ahmed, Manukau Institute of Technology

Abstract: Recent literature suggests that an organisation, in certain situations, can use simultaneously a low cost and a product differentiation strategic approach to build a core competence for long-term competitive advantage. This view challenges Michael Porter’s popular strategic concept of gaining a structural competitive advantage by becoming a cost leader or differentiator but not both. The research investigates the strategic approach of the New Zealand-based operation of a global undifferentiated product processing company in the petrochemical industry. It concludes that both a low-cost strategy and effective management of logistics differentiates the company’s undifferentiated product. The low cost - logistics differentiation approach provides higher levels of service that leads to better customer satisfaction and penetration of the wider market. This paper posits the usage of logistics as a core competence to differentiate an undifferentiated commodity product for competitive advantage.