my personal learning paper

8/4/2019 My Personal Learning Paper

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Posters five forces of

competition modelCost leadership Differentiation

Rivalry against

existing competitors

Once a company holds the lowest

cost position in the market, its

competitors will hesitate to

compete in terms of price

Once a products meaningful

uniqueness makes purchasers

highly satisfied, it may build up

loyalty in them

Bargaining power of

buyers

Lowest cost position can help a

company eliminate the bargaining

power of customerscustomersstop bargaining if theres no

elsewhere to find a lower price

Loyalty also means customers

keep sticking to a product without

caring too much about its price

Bargaining power of

suppliers

A low-cost leader dominating

market share can compel powerful

suppliers to reduce price or, at

least, curb the level of price

increases set by suppliers.

On grounds of products

uniqueness, differentiation

strategy followers can increase

their prices to make up for the

costs charged by suppliers

Threats of new

entrants

To compete and break the costbarrier which is set by low-cost

leader, new entrants must enter the

industry at a large scale and accept

low profits in the long term until

balance and move on efficiently

To enter the market, new entrantsmust be able to provide a product

whose features are more attractive

or better than existing products' or

a better product with a lower

price.

Threats of substitute

products (*)

A company following cost

leadership strategy provides

customers price value and retains

its customers by keep providing

good prices to deal with substitute

products issue

Without loyalty , customers may

change to other products or

substitutes which are satisfying to

them (better features , better

price)

Figure 2. Cost Leadership and Differentiation in relationship toPosters five forces

(*) I still remember when you, Dr. Jones, mentioned substitute products, you gave us an example

of different types of cell phone. Your point was thata substitute product of a cell phone is

another one with different, better features or abetter price (like a Nokia cell phone and an

Iphone4). From my point of view, a substitute product is a product which is not the same type as

the substituted product. I mean, an Iphone4a cell phone is not the substitute product of a Nokiacell phone. The substitute product of a Nokia cell phone should be an Ipadwhich is merely not

a cell phone (a tablet computer) but it can be brought along and can be used to make a phone call

like a cell phone. The substitute product of a motorbike is an e-bike, not another motorbike of a

different brand, having different features. I am wondering whether my perspective on this is

accurate or not. I hope you can help me to have precise understanding.


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B/ Some examples related to the issue

Examples of organizations / companies using Cost Leadership strategyName of the

company /

organization

Type of

businessHow they carry out the strategy

McDonalds

Fast food

_ Divide labor force efficiently for its production processes

_ Apply tight management control and product development

strategy effectively

_ Have a strong top-down style of management

_ Use fewer in-store managers allows the company to hire lower-

wage workers

_ Purchase the land and building for its restaurants chain with a

good price

Enable McDonalds to offer customers the most reasonableprices everyday

Wal-Mart Discount

department

stores and

warehouse

stores

_ Obtain merchandise in bulk for cheaper prices

_ Develop close relationships with suppliers and vendors to secure

goods with the cheapest possible price

_Develop its own distribution network to cut out the cost of

traditional shipping methods or external supply chains

Enable Wal-Mart to implement the every day low prices(EDLP) strategyoffer customers products with the

lowest prices day in , day out

Examples of organizations / companies using Differentiation strategyName of the

company /

organization

Type of

businessHow they carry out the strategy

Apple Inc. Consumer

electronics,computer

software,

and

personal

computers

_ Create its own hardware (Macintosh) and software whose

features are nowhere to be found and bring customers new

experience of using PC.

_ Have a very strong public association with high quality and

unique product design, even its showrooms._ Apple's cheapest computers and electronics are consistently in

the midrange, so its computers can satisfy customers statusneed.

_Innovate new products year in, year out , which makes the

companys customers never feel enough Enable Apple to charge higher while nurturing

customers loyalty so well


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II. Just-in-Time (JIT)A/ My perspective on the issue

Just-in-Time (JIT) is a Japanese management philosophy which concentrates on low-cost high

quality product, on-time production and waste elimination (including time and resources) inproduction process by producing the right product to meet the right demand

+ In the correct quantity

Demand pulls production (1)Minimize inventory and save costs (*)

+ At the correct time

Workers and managers must work where required at any given time and try to diminish any

holds-up (Lateness of suppliers, product errors) (2)

All processes should be kept running continuously to avoid idle time (3)

(1) + (2) + (3) Save time (**)

(*) + (**) A drive for continuous improvement

B/ Relationship to Total Quality Management (TQM)

_ According to the overarching principles of JIT, when inventory is kept to a minimum degree, a

company can save costs (*), therein lies lower cost of TQM . In other words,JIT cuts the cost of

quality.

_ Not only does JIT save cost (*), but it also saves time (**) and to do so, (1) , (2) and (3) must

be implemented meticulously, especially (2). Therefore, it is possible to deduce thatJIT

improves quality.

_Better quality means less inventory and a better, easier-to-employ JIT system

Ford once applied JIT successfully for Ford KA production

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