Background:
More than 1.2 million residents in the state of Arizona get their power from Arizona Public Service (APS), a public utility provider (Arizona Public Service, 2023). The corporation manages an extensive portfolio of power plants, some of which are powered by fossil fuels (coal, nuclear, and natural gas), others by renewable resources (solar and wind power), and still others by a combination of these and other energy sources. Nevertheless, APS has been confronting issues connected to costs in recent years. These challenges include increased costs associated with maintaining and operating its old power infrastructure and demand from regulatory authorities to move to greener energy sources (Arizona Public Service, 2023).
Challenges:
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Businesses that utilize this approach seek to undercut their competitors' pricing to provide the lowest price on the market for their products or services. Businesses often use this method to serve a particular, segmented target market (Hendron, 2022). In this case, APS is serving the state of Arizona market.
APS needs to concentrate on a cost-centered business strategy that prioritizes cost efficiency and optimization across all operations in order to overcome the difficulties that have been presented. This strategy will entail a variety of strategies, including the following:
APS should find possibilities to minimize its operating expenditures by enhancing its operational efficiency and simplifying its business procedures. This would get the company closer to its goal of lowering operating costs. For instance, the corporation might establish more effective maintenance procedures to lessen its power plants' offline time and increase their
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To achieve the most significant possible savings in operational expenses due to this transformation, the corporation should prioritize investments in low-cost renewable technologies such as solar and wind power (Arizona Public Service, 2023).
Strategy for Differentiation:
A differentiation strategy is a plan organizations develop to provide consumers with something distinctive, different, and separate from what their competitors may provide. The primary goal of executing a differentiation strategy is to gain a competitive advantage. A company will typically do this by examining its strengths and limitations, the demands of its consumers, and the total value it can deliver (Indeed Editorial Team, 2022).
APS should separate itself from its competitors by stressing its dedication to customer service and community participation to support its cost reduction strategy. This can require using a variety of strategies, such as the following