OUHK 2013 Tutorial 2
B399 Management
Policy and Strategy
Tutorial 2
Kent Ip
OUHK
Course Overview
Textbook: Strategic Management and
Competitive Advantage – Concepts and
Cases, 4th edition, Barney and Hesterly,
Pearson
Part 2
Business Level Strategies (Chapter 4 & 5)
Chapter 4 Cost Leadership
Chapter 5 Product Differentiation
Chapter 4
Cost Leadership
4.1 What is Business-Level
Strategy?
P.122 Business-level strategies are actions firm take to gain competitive advantages in a single market or industry
Corporate-level strategies are actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously
The 2 business-level strategies discussed in this book are Cost Leadership and Product
Differentiation. They are often called Generic
Business Strategies
4.2 What is Cost Leadership?
A firm chooses a cost leadership business strategy focuses on gaining advantages by reducing its costs to below those of all its competitors. This does not mean that this firm abandons other business or corporate strategies 4.3 Important Sources of Cost
Advantages for Firms
4.3.1 How can a firm gains cost advantages
(become a cost leader)?
1. Size differences and economies of scale
2. Size differences and diseconomies of scales
3. Experience differences and learning-curve economies 4. Differential low-cost access to productive inputs
5. Technological advantages independent of scale
6. Policy choices
4.3.1 How can a firm gains cost advantages (become a cos
1. Size differences and economies of scale
Economies of scale are said to exist when the increase in firm size (measured in terms of volume of production) is associated with lower costs
(measured in terms of average costs per unit of production) A. firms can use differences specialized machines toof increase
1. Size and economies scale output
B. firms can build larger plants
C. firms can increase employee specialization
(division of labor)
D. firms can spread overhead costs across more units produced
Policy and Strategy
Tutorial 2
Kent Ip
OUHK
Course Overview
Textbook: Strategic Management and
Competitive Advantage – Concepts and
Cases, 4th edition, Barney and Hesterly,
Pearson
Part 2
Business Level Strategies (Chapter 4 & 5)
Chapter 4 Cost Leadership
Chapter 5 Product Differentiation
Chapter 4
Cost Leadership
4.1 What is Business-Level
Strategy?
P.122 Business-level strategies are actions firm take to gain competitive advantages in a single market or industry
Corporate-level strategies are actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously
The 2 business-level strategies discussed in this book are Cost Leadership and Product
Differentiation. They are often called Generic
Business Strategies
4.2 What is Cost Leadership?
A firm chooses a cost leadership business strategy focuses on gaining advantages by reducing its costs to below those of all its competitors. This does not mean that this firm abandons other business or corporate strategies 4.3 Important Sources of Cost
Advantages for Firms
4.3.1 How can a firm gains cost advantages
(become a cost leader)?
1. Size differences and economies of scale
2. Size differences and diseconomies of scales
3. Experience differences and learning-curve economies 4. Differential low-cost access to productive inputs
5. Technological advantages independent of scale
6. Policy choices
4.3.1 How can a firm gains cost advantages (become a cos
1. Size differences and economies of scale
Economies of scale are said to exist when the increase in firm size (measured in terms of volume of production) is associated with lower costs
(measured in terms of average costs per unit of production) A. firms can use differences specialized machines toof increase
1. Size and economies scale output
B. firms can build larger plants
C. firms can increase employee specialization
(division of labor)
D. firms can spread overhead costs across more units produced