Business Strategies For A Competitive Advantage Over Rivals

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Good business strategies allow a firm to gain and sustain a competitive advantage over its rivals. Broad generic business strategies can have risks and drawbacks. In a broad generic differentiation strategy, firms run the risk of the product becoming commoditized, and the competitors have matched the quality standards of the product, which then shifts the focus to price. Also, firms need to control costs, and if its differentiated features raise costs but not perceived value in the consumer’s minds, they lose their differentiated status, according to Rothaermel (2017). Profit margins are eroded when costs increase. Another risk for a broad generic differentiated or cost-leadership strategy occurs when consumer’s taste change. With a…show more content…
They will locate warehouses and inventory near operations to keep transport costs down.
Operations: A cost leadership firm will employ economies of scale in order to sell larger quantities at a lower price. This firm might also outsource activities in order to keep capital costs low and control labor costs.
Distribution and Sales: This form will employ the use of technology in order to be more efficient in distribution and sales. They will keep a low marketing budget in order to control costs. Selling larger quantities allows them to spread their fixed costs over more units, especially if specialized equipment for large production is required. Although, this firm will also need to determine the correct output to produce in order to reach its minimum efficient scale. They will also deploy the use of learning curves and experience curves in their operations.
Research and Development- Support Activites: The cost will be low for R&D activities as this firm would be an imitator and not a creator.
Value Chain for Firm using Differentiation
This firm will employ value chain activities that help increase perceived value or decrease costs using value drivers related to product features, customer service, and complements according to Rothaermel (2017). Examples of value chain activities for differentiated products include the following:
Supply Chain Management: Upgraded or superior raw materials to ensure quality or differentiation in features are apparent.
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