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1. Value chain analysis and benchmarking can reveal a great deal about a firm's cost competitiveness.
-2. There are three main areas in a company's overall value chain where important differences in the costs of competing firms can occur: a company's own activity segments, suppliers' part of the industry value chain, and the forward channel portion of the industry chain.
-3. When the source of a firm's cost disadvantage is internal, managers can use any of the following eight strategic approaches to restore cost parity:
- Implement the use of best practices throughout the company, particularly for high-cost activities
- Try to eliminate some cost-producing activities altogether by revamping the value chain
- Relocate high-cost activities to geographic areas where they can be performed more cheaply
- Search out activities that can be outsourced from vendors or performed by contractors more cheaply than they can be done internally
- Invest in productivity-enhancing, cost-saving technological improvements
- Innovate around the troublesome cost components
- Simplify the product design so that it can be manufactured or assembled quickly and more economically
- Try to make up the internal cost disadvantage by achieving savings in the other two parts of the value chain system.
-4. If a firm finds that it has a cost disadvantage stemming from costs in the supplier or forward channel portions of the industry value chain, then the task of reducing its costs to levels more in line with competitors usually has to extend beyond the firm's own in-house operations.
What else can I help you with?
What extent do Walmart strategic options exploit Walmart's competitive advantages?
Walmart's strategic options, such as cost leadership and e-commerce expansion, effectively exploit its competitive advantages, including its vast supply chain network and economies of scale. By leveraging its ability to source products at lower costs and passing those savings to customers, Walmart reinforces its brand as a low-price leader. Additionally, the integration of technology in its logistics and online platforms enhances customer convenience and strengthens its market position against competitors. Overall, these strategies capitalize on Walmart's strengths to maintain its dominance in the retail sector.
What are the pros and cons of product promotion?
Some of the advantages of product promotion is that it is versatile and cost effective. The disadvantage is that it may not go to the target audience.
What are the advantages and disadvantages of low-cost strategy?
The main advantages of low-cost strategy are that costs are reduced and this will increase the profit margins. However, there are disadvantage as well which may include having low quality on the output due to low investment cost.
What are disadvantages of market segmentation?
Biggest disadvantage is oversegmentation - the the segment is simply too small to be addressed economically or meaningfully. The benefits of relevance and cost efficiency of segmentation usually outweigh any drawbacks.
How does strategic sourcing work?
Strategic sourcing is a method of purchasing re-evaluating a company's purchasing of products. The process involves systematically checking and evaluating the total price of the supply market (What a company is purchasing), cross referencing it with what they could be purchasing, and establishing a new supply chain. (Purchasing the more cost-effective materials)
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A sentence for the word disadvantage?
Knowing his disadvantage, John decided not to fight with his broken wrist.
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The only disadvantage would be that it does cost money.
Disadvantage of data glove?
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Explain the nature and Scope of Strategic cost management?
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What are the advantage and disadvantage of ultra-rapid freezing?
The advantage of ultra rapid freezing is that it last a long time. The disadvantage is that it cost a lot.
