Competitive Strategies.ppt

Competitive Strategies Corporate Level Directional Strategies Growth Vertical: Backward or forward integration Horizontal: Exporting, Licensing, Joint Ventures, acquisitions, etc. Diversification Stability Retrenchment Business Unit Strategies FINDING A NICHE Low Cost Strategy Wal-Mart, Southwest Airlines, HR Block Differentiation Methods Total Quality Management The Primary Method of Differentiation Customer Focus Management Takes Lead Employee Training and Empowerment Continuous Improvement System of Capturing Quality Costs Other Differentiation Methods Process Innovations Computerizing manual operations Product Innovations Hewlett Packard (50% of products have been on the market less than 2 years) Organizational Expertise Golf pro shops verses buying golf equipment at Wal-Mart Service Marketing Value of Product or Service Value Chains Progression of activities that add value in the context of organization continuum Process Value Analysis (Activity Based Management) Documentation of Activities Categorize Activities as: Value Added Non-Value Added Define Lead Time From Order Receipt to Delivery Eliminate or minimize non value-added activities Improve value-added activities Low Cost Leadership: Improve Costing Systems Costs are traced to cost objects as closely as possible Cost objects are targets of accumulations of costs (products, departments, divisions) As to cost objects, costs are classified as: Direct Costs – Easily traceable to cost objects Indirect Costs – Cannot be easily traced to cost objects, thus must be assigned or allocated Indirect costs are the problem Indirect Cost Allocation Methods Volume Based Units Produced, Direct Labor Hours, Machine Hours, Material Cost, Direct Labor Cost Activity Based Costing Accumulate costs first by activity pools Next, assigns activity costs to cost objects On the basis of respective cost object’s usage of the activity Gives the TRUE COST Other Cost Competitive Strategies Cellular Manufacturing Target Costing Jus