Business Management Essay
Overall cost leadership is based on creating a low-cost position relative to a firm’s peers, managing relationships throughout the entire value chain to lower costs. (McDonalds, Walmart)
Pitfall: Too much focus on one or a few value chain activities. Increase in the cost of the inputs on which the advantage is based. The strategy is imitated too easily. A lack of parity on differentiation. Reduced flexibility. Obsolescence of the basis of a cost advantage.
Differentiation implies products and services that are unique & valued, emphasis on non-price attributes for which customers will gladly pay a premium. (Apple, …show more content…
Strategies: Create efficient manufacturing operations, lower costs as customers become price-sensitive, adopt reverse or breakaway positioning.
Decline: Industry sales and profits begin to fall, price competition increases, industry consolidation occurs.
Strategies: Maintaining the product position, harvesting profits & reducing costs, exiting the market, consolidating or acquiring surviving firms.
- Turn-around strategies
A turnaround strategy involves reversing performance decline & reinvigorating growth toward profitability through asset & cost surgery, selected market & product pruning, piecemeal productivity improvements.
- Corporate-level strategy
- Vertical integration
Vertical integration becoming its own supplier or distributor through backward integration, forward integration.
- Transaction costs
Every market transaction involves some transaction costs, search costs, negotiation cost, contract cost, monitoring costs, enforcement costs, need for transaction specific investments, administrative costs.
- Portfolio management and the BCG matrix (major emphasis)
Portfolio management involves a better understanding of the competitive position of an overall portfolio or family of businesses by suggesting strategic alternatives