MGT 409 Lecture Notes - Lecture 5: Cost Leadership, Tacit Collusion, Customer Service
Document Summary
The basic strategies to overcome the five forces and achieve competitive advantage: overall cost leadership. Manage relationships throughout the entire value chain: differentiation. Create products and/or services that are unique and valued. Non-price attributes for which customers will pay a premium o. Narrow product lines, buyer segments, or targeted geographic markets. Attain advantages either through differentiation or cost leadership. Sounds simple, but it"s harder than it looks. Cost minimization in all activities in the firm"s value chain, such as r&d, service, sales force, and advertising. Need to maintain parity in quality or design; price alone will not gain advantage. This does not just mean having lower prices, in the sense of just putting a lower number on your price tags. Unless your entire business plan is built around having the lowest operating costs and passing those savings on to your customers to create a competitive advantage, all this strategy will accomplish is a lower gross income.
