The important concept of the value chain model is value addition at low costs

The important concept of the value chain model is

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gets profits. The important concept of the value chain model is value addition at low costs and identification of multiple ways to get that value (Lecture 3). Differentiation Strategy Differentiation strategy is an approach that a company takes with a view of developing products or services that give unique and distinctive feature which customers appreciate and perceive to be better that those of the competing brands or competitors. Through this generic strategy, an organisation produces non-standardised products for its customers who value the different features more than they value the cost. For instance, a firm may select one or two attributes that many buyers in an industry perceive to be important and then it uniquely positions itself to offer the needs in the market. Through the differentiation, the firm gets rewards by charging premium prices. However, the success of a company’s differentiation strategy relies on its ability to consistently and continuously improve the differentiated characteristics of the product before the competitors develop a better product with improved features for the consumers. The value-activities that lead to a successful differentiation strategy include a sound infrastructure, human resource management, technology development and effective procurement activities (Lecture 5). Seven major problems in making an acquisition An acquisition is a strategy that occurs when one firm buys a controlling stake in another firm with the aim of having the acquired company part of its business portfolio. However, acquisitions have problems that include integration difficulties or challenges between the two firms, inadequate evaluation of the acquisition target and existence of huge debts from the acquired firm. Further, most acquisitions do not achieve the expected synergy because they fail to create more value but increase transaction costs establish in a bid to create synergy. Again,
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  • Fall '19
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