Chapter 4 - Cost Leader

Front 1

Business-level Strategy

Back 1

actions firms take to gain competitive advantage in single market or industry

Front 2

Corporate-level Strategy

Back 2

actions firms take to gain competitive advantage by operating in multiple markets or industries

Front 3

Cost leadership biz strat

Back 3

gain advantage by reducing costs below all competitors

Front 4

sources of cost leadership

Back 4

economies of scale, diseconomies of scale, experience/learning curve, access to low-cost inputs, technological advantages and policy choices

Front 5

economies of scale

Back 5

increase in firm size associated with lower costs (average cost per unit decreases) (examples: large cost saving machines, employee specialization, spread of overhead)

Front 6

diseconomies of scale

Back 6

average cost per unit begin to rise (firm becomes too complex, employees become unmotivated because jobs become more simplistic/specific, expanding to global market and gaining more specific costs for that expansion)

Front 7

learning curve

Back 7

the more you do something the lower it starts to cost per unit, acquire market share over time

Front 8

technological hardware

Back 8

machines and robots

Front 9

technological softwarte

Back 9

quality of relations between labor and management

Front 10

low cost policy choices

Back 10

what product mix to provide, simple standardized products

Front 11

economics of learning curve

Back 11

the higher cummulation of total products output the lower the cost per unit (airplanes cost dropped 20% everytime cummulative production doubled)

Front 12

Cost advantage VRIO?

Back 12

Rare (normally if first to produce more likely to have early economies of scale, when most firms operate on small basis won't have economies of scale) Imitable (economies of scale easy to duplicat, learning curve can be hard to duplicat, technology can be bought), access to low cost units can be hard to duplicate, organized (management motivates employees to reduce costs)

Front 13

U-form structure

Back 13

everyone reports to CEO and he looks over entire breadth of companhy