33:620:301 Lecture Notes - Lecture 5: Revamp, Sales Operations, Profit Margin

• School: Rutgers University
• Department: Management and Global Business
• Course: 33:620:301
• Professor: dennishamilton

Document Summary

Whether a company"s target market is narrow or broad. Whether the company is pursuing a compeiive advantage linked to lower costs/difereniaion. Low-cost leadership when a company becomes the industry"s lowest-cost provider rather than just being one of several compeitors with comparaively low costs sill provide a product/service acceptable to buyers. 2 opions of low-cost providing = more proit: lower-cost advantage atracts so many buyers that proit increases, maintain present price, use lower-cost edge to earn higher proit margin on each unit sold. 2 major avenues for achieving a cost advantage: perform value chain aciviies more cost-efecively than rivals, revamp the irm"s overall value chain to eliminate/bypass some cost-producing aciviies. Cost driver factor that has a strong inluence on a company"s costs. Efecive use of cost drivers: strive to capture all available economies of scale, take full advantage of experience & learning-curve efects, cost of performing an acivity can decline over ime as learning & experience build.