Strategic Cost Advantage And Competitive Advantage

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According to Michael Poter (cited in David 2011) the value chain can be best described as “the business of a firm, in which total revenues minus total costs of all activities undertaken to develop and market a product or service”. A strategic cost analysis “is the process whereby a firm determines the costs associated with organizational activities from purchasing raw material to manufacturing products to marketing those products” (David 2011, 119). The goal of this analysis is to determine whether or not a company has a competitive advantage over its competitors. This is done by identifying where, low-cost advantages or disadvantages that exist anywhere along the value chain from raw material to customer service activities. Also the strategic cost analysis also enables the company to better identify its own strengths and weaknesses. Once a company is capable of producing goods at lower costs than the market price within the industry, the company earns profits and it has a competitive advantage. This advantage gives a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. A company can also achieve a competitive advantage if their core competence is…show more content…
This money invested over the years has allowed Procter & Gamble to grow into a successful business earning $12.7 billion in 2010 and have at least one of its products used in 99% of the households in United States and Canadian. Although research and development has played a major role in Procter & Gamble’s success in having 250 branded products. Producing the products customers need with simple ways to use them, is what keeps the customers continuously buying the products over the years causing a product produced to become a well known branded one over
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