{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

STRATEGY - W HAT IS STRATEGY STRATEGY IS ABOUT CHOICE T HE...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
WHAT IS STRATEGY? STRATEGY IS ABOUT CHOICE. THE ESSENCE OF A COMPANY'S STRATEGY IS CHOOSING WHAT TO DO AND WHAT NOT TO DO IN ORDER TO ACHIEVE COMPETITIVE ADVANTAGE. A COMPETITIVE ADVANTAGE IS SOMETHING A FIRM CAN DO THAT RIVALS CANNOT MATCH. A COMPETITIVE ADVANTAGE EITHER LEADS TO HIGHER DEMAND OR LOWER COSTS. OVER TIME, TECHNOLOGICAL IMPROVEMENTS BECOME OBSOLETE AND AVAILABLE TO ALL FIRMS. AS A COMPANY INCREASES THE PACE OF INNOVATION, ITS PROFITABILITY OFTEN BEGINS TO STAGNATE OR EVEN ERODE. THE REASON CAN BE SUMMED UP IN ONE WORD: COMPLEXITY. THE MOST COMMON REASONS FOR THE SPREAD OF COMPLEXITY IN A COMPANY'S VALUE CHAIN: BAD ECONOMIC DATA, OVEROPTIMISTIC SALES PROJECTIONS, AND ENTRENCHED MANAGERIAL ASSUMPTIONS. IN SERVICE AND KNOWLEDGE BUSINESSES, THE CONTINUAL INTRODUCTION OF NEW, INFORMATION RICH OFFERINGS CAN LEAVE VIRTUALLY EVERY EMPLOYEE STRUGGLING TO MAKE SENSE OF A COMPLEX SERVICE PORTFOLIO. ECONOMIES OF SCOPE OCCUR WHEN ONE RESOURCE SERVES MULTIPLE USES.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
ECONOMIES OF SCALE REFER TO DECLINES IN UNIT COSTS OF A PRODUCT AS THE ABSOLUTE VOLUME PER PERIOD INCREASES. SCALE ECONOMIES CAN BE PRESENT IN NEARLY EVERY FUNCTION OF A BUSINESS, INCLUDING MANUFACTURING, PURCHASING, RESEARCH AND DEVELOPMENT, MARKETING, SERVICE NETWORK, SALES FORCE UTILIZATION, AND DISTRIBUTION. BECAUSE KRAFT SENDS MANY CONSUMER PRODUCTS THROUGH THE SAME DISTRIBUTION SYSTEM, IT HAS AN EDGE OVER A RIVAL THAT HAS TO MAINTAIN A SIMILARLY LARGE SYSTEM FOR FEWER PRODUCTS. SALES, DISTRIBUTION, ADMINISTRATION, RESEARCH AND DEVELOPMENT--THESE ARE AMONG THE FUNCTIONS WHERE ECONOMIES OF SCOPE ARE MOST PRONOUNCED.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern