The Quest for Competitive Advantage can be purchased in the SCM bookstore.

Company managers are often stunned when a competitor cuts its prices to “unbelievably low” levels or when a new market entrant comes on strong with a great new product offered at a surprisingly low price. Such competitors may not, however, be buying market positions with prices that are below costs. They may simply have substantially lower costs and therefore are able to offer prices that result in more appealing customer value propositions. One of the most telling signs of whether a company’s business position is strong or precarious is whether its cost structure and customer value proposition are competitive with industry rivals.

Essentials of Strategic Management by Gamble, Thompson, and Peteraf provides readers with a conceptually strong treatment of strategic management principles and timely examples and illustrations in a concise, easy-to-read writing style.  The text examines the importance of a viable business model that offers a compelling customer value proposition and includes a healthy profit formula. The text also focuses on the importance of a company’s resources and capabilities in building and sustaining competitive advantage and includes an extensive discussion of differentiation and cost-based strategies.

A company’s cost position is especially critical in industries where price competition is typically the ruling market force. But even in industries where products are differentiated, rival companies have to keep their costs in line with rivals offering value propositions based upon a similar mix of differentiating features. But a company must also remain competitive in terms of its customer value proposition. Tiffany’s value proposition, for example, remains attractive to people who want customer service, the assurance of quality, and a high-status brand despite the availability of cut-rate diamond jewelry online. Target’s customer value proposition has withstood the Walmart low-price juggernaut by attention to product design, image, and attractive store layouts in addition to efficiency. The key for managers is to keep close track of how cost effectively the company can deliver value to customers relative to its competitors. If the company can deliver the same amount of value with lower expenditures (or more value at a similar cost), it will maintain a competitive edge.

The text discusses the analytical tools that are useful in in determining whether a company’s value proposition and costs are competitive and provides proven guidance on crafting and executing strategies capable of bolstering a company’s market standing and competitiveness.

 

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