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Strategic Management: Formulation and Implementation RYSZARD BARNAT, LLM., DBA, PHD (STRAT. MGMT)
Strategic Management > STRATEGY FORMULATION > Generic Business Unit Strategies
Steps In Strategic Cost Analysis
Generic Business Unit Strategies What Is A Business Strategy? Strategic Business Units Strategic Business Elements The Concept Of Business Level-strategies Porter's Generic Strategies Overall Cost Leadership Differentiation Strategy Focus Strategy Stuck In The Middle Organizational Requirements For Generic Strategies Risks Of The Generic Strategies Achieving Competitive Advantage The Value Chain Linkages Within The Value Chain Cost Advantage The Value Chain And Cost Analysis Cost Behavior The Cost Of Purchase Inputs Segment Cost Behavior Cost Dynamics Gaining Cost Advantage Controlling Cost Drivers Sustainability Of Cost Advantage Pitfalls In Cost Leadership Strategies Steps In Strategic Cost Analysis Differentiation Sources Of Differentiation The Cost Of Differentiation Buyer Value And Differentiation Differentiation Strategy Routes To Differentiation Generic Business Unit Strategies - Summary
There are the following steps required in strategic cost analysis: Identify the appropriate value chain and assign costs and assets to it. Diagnose the costs drivers of each value activity and how they interact. Identify competitor value chains, and determine the relative cost of competitors and the sources of cost differences. Develop a strategy to lower relative cost position through controlling cost drivers or reconfiguring the value chain and/or downstream value. Ensure that cost reduction efforts do not erode differentiation, or make a conscious choice to do so. Test the cost reduction strategy for sustainability.
Differentiation Differentiation involves achieving competitive advantage through pinpointing product or service attributes that customers perceive as valuable and positioning the firm to meet those demands better than the competition.