Question
Need help preparing a MGMT-Mini-Case including an analysis of a strategically important issue confronting business in 2023. Topics to be included and discussed include: 1.
Need help preparing a MGMT-Mini-Case including an analysis of a strategically important issue confronting business in 2023.
Topics to be included and discussed include:
1. Background data and description of issue (with citations)
2. Strategic managerial implications for the company or industry
3. Recommended action agenda for management to further strengthen advantage
Written Case Topic: A low-cost provider strategy-striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers, usually by underpricing rivals.
Key Notes-Low-Cost Provider Strategies:
- The Two Major Avenues for Achieving Low-Cost Leadership
- To achieve a low-cost edge over rivals, a firm's cumulative costs across its overall value chain must be lower than competitors' cumulative costs. There are two major avenues for accomplishing this:
- 1.) Performing essential value chain activities more cost-effectively than rivals
- 2.) Revamping the firm's overall value chain to eliminate or bypass some cost-producing activities.
- To achieve a low-cost edge over rivals, a firm's cumulative costs across its overall value chain must be lower than competitors' cumulative costs. There are two major avenues for accomplishing this:
- A low-cost leader's basis for competitive advantage is lower overall costs than competitors. Success in achieving a low-cost edge over rivals comes from eliminating and/or curbing "nonessential" activities and/or outmanaging rivals in performing essential activities.
- A company has two options for translating a low-cost advantage over rivals into attractive profit performance. Option 1 is to use the lower-cost edge to underprice competitors and attract price-sensitive buyers in great enough numbers to increase total profits. Option 2 is to maintain the present price, be content with the present market share, and use the lower-cost edge to earn a higher profit margin on each unit sold, thereby raising the firm's total profits and overall return on investment.
Please put citations! Thank you in advance for your help!
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