ACCT 2102 Chapter Notes - Chapter 13: Bargaining Power, Cost Leadership, Product Differentiation
2 May 2016
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Firm"s approach for creating value for consumers ( value proposition"), which in turn creates profits for the firm. Important because determines how the firm positions itself within the target market and how it distinguishes itself from competitors. To formulate a good strategy, a firm should think about: Sustainability of its strategy: if your strategy is successful, other firms will try to imitate if they imitate successfully, they"ll take away most of your profits, two main ways to prevent imitation: How much of a threat do potential entrants pose: threat from substitute products: Analysis of the 5 forces helps you decide: 2 types of business strategies: cost leadership. Achieve lower costs than competitors and can then charge lower prices than and still make good profits. Stay ahead of competition by continuously finding ways to cut costs and improve efficiency of operations. Superior products can allow company to charge higher prices, people are willing to pay more for these elite products.
