Business Administration 1220E Lecture Notes - Lecture 2: Factor Endowment, List Of Auto Parts, Blood Diamond

• School: Western University
• Department: Business Administration
• Course: Business Administration 1220E
• Professor: Trevor Hunter

Document Summary

Firms seek to increase profits through international production and sales. Two general strategies: differentation: adding value to a product so consumers will pay more for it, low-cost: providing value to consumers at a lower cost than competitors. Porter: to increase sales, either be so different, or low cost. The efficiency of the primary and support value chain activities affect the profitability of the firm. Doing what you do best- ie. your core competence is a more efficient use of money. Firms tend to maximize efficiency by doing what they do (primary activities) and outsourcing what they have to do to support what they do (support activities) to places that can do them more efficiently (ie. cheaper) Firms become more efficient through the conversion of resources into capabilities or competencies. Resources: factors that a firm possesses which, when utilized provide value. The ability to effectively use the resources a firm possesses to create value.