BUS 478 Chapter 4: Building competitive advantage through functional-level strategy

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 478
• Professor: Larry Wosk

Document Summary

Chapter 4: building competitive advantage through functional-level strategy. Functional level strategies: strategies aimed at improving the effectiveness of a company"s operations and thus its ability to attain superior efficiency, quality, innovation, and customer responsiveness. Distinct competencies: shape the functional level strategies. Differentiation and low cost structure: determines a company"s ability to attain superior efficiency, quality, innovation, and customer responsiveness; moreover, differentiation creates value which leads to a competitive advantage and superior profitability and profit growth. Achieving superior efficiency: here we look at the steps that companies can take at the functional level to increase their efficiency and thereby lower their cost structure. Economics of scale: economies of scale are units cost reductions associated with a large scale of output. If there are significant economies of scale a company may benefit by keeping prices down and increasing volume. Fixed costs: economies of scale spread fixed costs over a large production volume (mass production).