It is not enough for an enterprise to consider the structure of the industry, it also has to take an appropriate position within the industry. The positioning of an enterprise has to match the great option it had taken with regard to the market (in the chocolate industry, M&M/MARS, a US company preferred mass production of an average quality chocolate while Swiss companies such as Lindt chose to market high quality production in a more limited distribution network). The fundamental component of the positioning is the competitive advantage, which can be divided into advantage by low costs or advantage by differentiation. The advantage by low costs means that the company is more efficient than its competitors on the conception, the production, and the marketing of a product (thus, for a given price, the firm will be more profitable than the others). The differentiation is the ability of the enterprise to supply its customers with a same product but of a better quality (that is, intrinsic quality or services). In both cases, the competitive advantage translates a higher productivity of the enterprise. However it is very difficult for a firm to dispose simultaneously of both advantages by the costs and by differentiation (indeed, proposing great performance, good quality and services is costly). An enterprise can improve its technology and method of production to reduce its cost and obtain a differentiation, but in the long run the competitors will imitate its behavior and the enterprise will be required to choose which advantage to push. Anyway, no strategy can obtain good results if the enterprise takes care of both advantages at the same time.
It is not enough for an enterprise to consider the structure of the industry, it also has to take an appropriate position within the industry. The positioning of an enterprise has to match the great option it had taken with regard to the market (in the chocolate industry, M&M/MARS, a US company preferred mass production of an average quality chocolate while Swiss companies such as Lindt chose to market high quality production in a more limited distribution network). The fundamental component of the positioning is the competitive advantage, which can be divided into advantage by low costs or advantage by differentiation. The advantage by low costs means that the company is more efficient than its competitors on the conception, the production, and the marketing of a product (thus, for a given price, the firm will be more profitable than the others). The differentiation is the ability of the enterprise to supply its customers with a same product but of a better quality (that is, intrinsic quality or services). In both cases, the competitive advantage translates a higher productivity of the enterprise. However it is very difficult for a firm to dispose simultaneously of both advantages by the costs and by differentiation (indeed, proposing great performance, good quality and services is costly). An enterprise can improve its technology and method of production to reduce its cost and obtain a differentiation, but in the long run the competitors will imitate its behavior and the enterprise will be required to choose which advantage to push. Anyway, no strategy can obtain good results if the enterprise takes care of both advantages at the same time.
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