BUS 800 Chapter Notes - Chapter 5: Cost Driver, Profit Margin, Human Resource Management

• School: Ryerson University
• Department: Business
• Course: BUS 800
• Professor: Knud Jensen

Document Summary

A company"s strategy deals exclusively with the specifics of management"s game plan for competing successfully. The two biggest factors that distinguish one competitive strategy from another boil down to: whether a company"s market target is broad or narrow, whether the company is pursuing a competitive advantage linked to lower costs or differentiation. These two factors give rise to five competitive strategies: a low cost provider strategy, a broad differentiation strategy, a forced low cost strategy, a focused differentiation strategy, a best cost provider strategy. A company achieves low-cost leadership when it becomes the industry"s lowest cost provider rather than just being one of perhaps several competitors with comparatively low costs. The two major avenues for achieving a cost advantage: perform value chain activities more cost effectively than rivals, revamp the firm"s overall value chain to eliminate or bypass some cost-producing activities. A cost driver is a factor that has a strong influence on a company"s costs.