SMG SI 422 Lecture Notes - Lecture 7: Mckee Foods, Opportunity Cost

• School: Boston University
• Department: Strategy & Innovation
• Course: SMG SI 422
• Professor: John Kirks

Document Summary

To achieve competitive advantage, the firm must drive a wide wedge between willingness to pay among buyers and the costs it incurs. To do that, the firm must be unique and valuable and all their activities must be in harmony. Dual ad(cid:448)a(cid:374)tage is diffi(cid:272)ult to a(cid:272)hie(cid:448)e (cid:271)e(cid:272)ause it is hard to i(cid:374)(cid:272)rease (cid:272)usto(cid:373)er"s (cid:449)illi(cid:374)g(cid:374)ess to pay while de(cid:272)reasi(cid:374)g (cid:272)ost. Usually, o(cid:374)e has to i(cid:374)(cid:272)ur (cid:373)ore (cid:272)ost to i(cid:374)(cid:272)rease (cid:272)usto(cid:373)er"s (cid:449)illi(cid:374)g(cid:374)ess to pay. The height of the bar represented how much cents each one incurs. Profit is how much is left after they subtracted all their expenses. Looking at the bar graph, you can see there is very little profit left: analyze figure 8. Is their strategy successful: collins kitchen (this is actually hostess)". Their outbound logistics are their biggest costs with manufacturing being the next one. Instead of fo(cid:272)usi(cid:374)g (cid:373)ore o(cid:374) ho(cid:449) to i(cid:374)(cid:272)rease (cid:272)usto(cid:373)er"s (cid:449)illingness to pay, they focused on outbound logistics.