value chain - Power on the value chain negotiating power...

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10/22/2014 Power on the value chain negotiating power setting prices and costs What drives this power: barriers to entry vertical integration # of suppliers Added value - > competitive advantage conceptual -> calculate determines their bargaining power opportunity cost - lowest price that the supplier must sell at what the value of the next best alternative is In the long run in a perfect competition model, prices equal costs Rivalry: - How segmented is the market? - How important is priced based competition? Dual advantage, lower OC and raise WTP Competitive advantage = “wider wedge” between WTP+cost ------ Show the different types of advantages….draw them show that the buyers captured more value, etc link the cases to what we’re learning….cola wars buyer power, substitutes, rivalry Ducati differentiation strategy activity analysis R&D, marketing, sales, production, management, hr - inside the firm Added value, link it to competitive advantage activities that link to competitive advantage
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Unformatted text preview: fixed vs variable costs list 5 or 6 big takeaways from each case and expand on it-------You control your customer by controlling your costs Factor cost - cost of your raw materials Productivity cost - what you do with those raw materials, how efficient are you outsourcing does not reduce your productivity cost, but factor costs--------Efficiency - keeping your costs low operational efficiency is not strategy unless you’re doing something different, it is not a strategy Key is to not be immitateable if another firm can achieve that efficiency, it is not a strategic position Strategic herding - when everybody does the same thing, goes down the same road creates intense rivalry and price based competition not a sustainable strategic advantage Local monopoly - you can set price however you want The more the positioning closes in, the more the rivalry heats up, the more the price competition is--------...
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