DiscussionQuestions03

DiscussionQuestions03 - Chapter 4 Discussion Question 1 How...

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Chapter 4 Discussion Question 1 How are the four generic building blocks of competitive advantage related to each other? According to page 87 of the textbook, the four factors "are highly interrelated, and the important ways they affect each other should be noted. For example, superior quality can lead to superior efficiency, and innovation can enhance efficiency, quality, and responsiveness to customers." Figure 3.6 shows that these four factors lead to competitive advantages via low costs and differentiation . 1. Superior efficiency contributes to low costs by extracting more tangible value per dollar of cost of assets and labor. It also allows for more differentiation via more effective use of existing resources. 2. Quality contributes to low costs by getting work done the right way the first time, thus saving money on rework, returns, and recalls. It allows for more differentiation by paying closer attention to details. 3. Innovation contributes to low costs by finding new ways to cut costs. It contributes to differentiation by finding new ways to achieve the desired ends of the current products. 4. Customer responsiveness contributes to low costs by reducing waste in producing unwanted products. It contributes to differentiation by incorporating features customers want. OEM 2009 MAN 6721 Luther Setzer page 1 of 6
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Chapter 5 Discussion Question 4 How can companies pursuing cost leadership and differentiation lose their place on the value frontier? A company pursuing cost leadership or differentiation (or both) can move itself to the forefront of the value frontier or, conversely, fall back from that leading edge. A company successfully moves to the forefront of the value frontier when it beats competitors in terms of cost, differentiation, or some optimum combination of the two. For instance, per Figure 5.8 of the textbook, Wal-Mart has earned a long stay as a cost leader at the leading edge of the value frontier via efficiency. Likewise, Nordstrom has also approached that leading edge as a differentiator via innovation and excellence. By contrast, K-Mart has fallen behind Wal-Mart in cost leadership just as Saks Fifth Avenue has fallen behind Nordstrom in differentiation. In the case of the latter two companies, the former two companies arose to compete and beat the latter two companies in their respective positioning, at least for now. In what ways can they regain their competitive advantage?
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This note was uploaded on 05/12/2010 for the course MAN 6721 taught by Professor Kraft during the Spring '10 term at University of Florida.

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DiscussionQuestions03 - Chapter 4 Discussion Question 1 How...

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