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    Strategy-The Quest To Keep Profit From Eroding

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    gregbaccay
    To keep profit from eroding, firms develop strategies to gain a sustainable competitive advantage by: 1) Delivering the same benefits as competitors at a lower cost or superior benefits at similar cost. 2) Gaining advantages at the industry level through factors like barriers to entry or at the firm level through valuable resources. 3) Employing strategies like cost reduction, product differentiation, or reducing competition to maintain their advantage.

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    Strategy-The Quest To Keep Profit From Eroding

    Uploaded by

    gregbaccay
    179 views14 pages
    To keep profit from eroding, firms develop strategies to gain a sustainable competitive advantage by: 1) Delivering the same benefits as competitors at a lower cost or superior benefits at similar cost. 2) Gaining advantages at the industry level through factors like barriers to entry or at the firm level through valuable resources. 3) Employing strategies like cost reduction, product differentiation, or reducing competition to maintain their advantage.

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    Strategy-The Quest to Keep Profit From Eroding

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    To keep profit from eroding, firms develop strategies to gain a sustainable competitive advantage by: 1) Delivering the same benefits as competitors at a lower cost or superior benefits at similar cost. 2) Gaining advantages at the industry level through factors like barriers to entry or at the firm level through valuable resources. 3) Employing strategies like cost reduction, product differentiation, or reducing competition to maintain their advantage.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    179 views14 pages

    Strategy-The Quest To Keep Profit From Eroding

    Uploaded by

    gregbaccay
    To keep profit from eroding, firms develop strategies to gain a sustainable competitive advantage by: 1) Delivering the same benefits as competitors at a lower cost or superior benefits at similar cost. 2) Gaining advantages at the industry level through factors like barriers to entry or at the firm level through valuable resources. 3) Employing strategies like cost reduction, product differentiation, or reducing competition to maintain their advantage.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    STRATEGY – THE QUEST TO KEEP PROFIT FROM

    ERODING
    MANAGERIAL ECONOMICS -
    MOTIVATION

    What’s the key to the company’s success?


    COMPETITIVE ADVANTAGE

     Succeeding in the face of competition requires that you first find a way to create an
    advantage and then devise a means to protect that advantage.
    STRATEGY IS SIMPLE

     To keep one step ahead of competitors or imitators and keep profit from eroding,
    firms develop strategies to gain a sustainable competitive advantage.
     Firms have competitive advantage when: a) deliver the same product or service
    benefits as their competitors but at a lower cost; b) deliver superior product or service
    benefits at a similar cost
     Firms with a competitive advantage are able to earn positive economic profits.
    ALLOCATION OF VALUE

    CONSUME
    R SURPLUS
    Price per unit = P300
    PROFIT
    Customer Value = P400 (maximum Cost per unit = P200
    Willingness to pay)

    COST
    SOURCES OF ECONOMIC PROFIT

     INDUSTRIAL ORGANIZATION (IO) ECONOMICS PERSPECTIVE – locates the source of advantage at the
    industry level
     RESOURCE-BASED VIEW (RBV) – locates it at the individual firm level
    IO VS RBV
    PORTER’S 5 FORCES MODEL
    RBV
    3 BASIC STRATEGIES

     COST REDUCTION
     PRODUCT DIFFERENTATION
     REDUCTION IN COMPETITIVE INTENSITY
    QUESTIONS

     Buyers have higher power when:


    a) Firms sell a highly differentiated product
    b) They are not a significant purchaser of the supplier’s output
    c) Switching costs are low
    d) The buyer industry is highly fragmented (buyers are not concentrated)
    QUESTION

     If a firm successfully adopts a product differentiation strategy, what should happen to the elasticity of demand for
    its product?
    a) Increase
    b) Decrease
    c) Become unit elastic
    d) Is unaffected
    QUESTION

     When a resource or capability is valuable and rare, a firm may gain a:


    a) Sustainable competitive advantage
    b) Competitive parity
    c) Cost advantage
    d) Temporary competitive advantage
    QUESTION

     Which of the following is critical for a firm adopting a cost-reduction strategy?

    a) the firm must be the first to adopt the cost-reduction strategy


    b) the strategy reduces costs by at least 10%
    c) the strategy is focused on reducing internal production costs
    d) the methods of achieving cost reductions are difficult to imitate

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