05 BUS 444 Chap 5

Lo8 the need for turnaround strategies that enable a

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Unformatted text preview: activities. LO8 The need for turnaround strategies that enable a firm to reposition its competitive position in an industry. 5-3 Three Generic Strategies 5-4 Three Generic Strategies 1. Overall cost leadership Low-cost-position relative to a firm’s peers Manage relationships throughout the entire value chain 2. Differentiation Create products and/or services that are unique and valued Non-price attributes for which customers will pay a premium 5-5 Three Generic Strategies 3. Focus strategy Narrow product lines, buyer segments, or targeted geographic markets Attain advantages either through differentiation or cost leadership 5-6 Example • Companies pursuing an overall cost leadership strategy McDonalds Wal-Mart • Companies pursuing a differentiation strategy Harley Davison Apple • Companies pursuing a focus strategy Rolex Lamborghini 5-7 Competitive Advantage and Business Performance 5-8 Overall Cost Leadership Tight set of interrelated tactics that includes: • Tight cost and overhead control • Avoidance of marginal customer accounts • Cost minimization in all activities in the firm’s value chain 5-9 Overall Cost Leadership • Experience curve refers to how business “learns” to lower costs as it gains experience with production processes with experience, unit costs of production decline as output increases in most industries 5-1...
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