Management and Organizational Studies 4410A/B Lecture Notes - Lecture 4: Ikea, World University Service, Phronesis

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 4410A/B
• Professor: Raymond Leduc

Document Summary

P(cid:396)i(cid:373)a(cid:396)(cid:455) dete(cid:396)(cid:373)i(cid:374)a(cid:374)t of fi(cid:396)(cid:373)"s p(cid:396)ofita(cid:271)ilit(cid:455) is att(cid:396)a(cid:272)ti(cid:448)e(cid:374)ess of i(cid:374)dust(cid:396)(cid:455) ope(cid:396)ati(cid:374)g i(cid:374) Important secondary determinant is its position within industry firm that is optimally positioned can generate superior returns. Firm can position itself by leveraging its strengths porter argues strengths fall under either cost advantage or differentiation. Three generic strategies result by applying these in either a broad or narrow scope: cost leadership, differentiation, focus. Being low cost producer in an industry for a given level of quality. Sells at either average industry price to earn higher profits than rivals, or below to gain market share. Firms that can produce more cheaply will remain profitable longer usually targets a broad market. Can gain this by improving efficiency, gaining unique access to low cost materials, optimal outsourcing, avoiding costs. Risks: other firms may be able to lower cost as well as tech improves.