Competitive Advantage
Competitive Advantage:
Question 1/2:
A competitive advantage is a position that a firm occupies in its competitive landscape.
Cost advantage
Cost advantage
A firm possesses a sustainable competitive advantage when it has value-creating processes and positions that cannot be duplicated or imitated by others, that lead to the production of above normal rents, in that it provides a long-term advantage that is not easily replicated.
Sources of competitive advantage:
Competitive advantage
Competitive advantage Similar products at lower price
Differentiation advantage
Differentiation advantage Price premium from unique products
Competitors’ gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The strategies relate to the extent to which the scope of a business' activities are narrow versus broad and the extent to which a business seeks to differentiate its products.
Question 3:
The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry.
Cost leadership
With this strategy, the objective is to become the lowest-cost producer in the industry. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale.
Why is cost leadership potentially so important? Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. If the achieved selling price can at least equal (or near) the average for the market, then the lowest-cost producer will (in theory) enjoy the best profits.
This strategy is usually associated with large-scale businesses
Question 1/2:
A competitive advantage is a position that a firm occupies in its competitive landscape.
Cost advantage
Cost advantage
A firm possesses a sustainable competitive advantage when it has value-creating processes and positions that cannot be duplicated or imitated by others, that lead to the production of above normal rents, in that it provides a long-term advantage that is not easily replicated.
Sources of competitive advantage:
Competitive advantage
Competitive advantage Similar products at lower price
Differentiation advantage
Differentiation advantage Price premium from unique products
Competitors’ gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The strategies relate to the extent to which the scope of a business' activities are narrow versus broad and the extent to which a business seeks to differentiate its products.
Question 3:
The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry.
Cost leadership
With this strategy, the objective is to become the lowest-cost producer in the industry. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale.
Why is cost leadership potentially so important? Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. If the achieved selling price can at least equal (or near) the average for the market, then the lowest-cost producer will (in theory) enjoy the best profits.
This strategy is usually associated with large-scale businesses