Strategic Positioning
Incresing customer value to create a sustainable competitive advantage is achieved through judicious selection of strategies. Cost information plays a critical role in this process through a process called strategic cost management. Strategie Cost management is the use of cost data to develop and idenufy. firms choose a strategic position that corresponds to one of two general strategies. (1) cost leadership and (2) superior products through differrentiation. The objective of the cost leadership strategy is to provide the same of better value to customers a lower cost than competitors; its objective is to increase customer value by reduion sacrifice. For example,reducing the cost of making a product by improving a process would allow the firm to reduce the product's selling price, thus reducing customer sacrifice. A differentiation strategy, on the other hand, increases customer vlue by increasing realization. Providing customers with something not provided by competitors creates a competitive advantage. For exmple, a computer retailer could or on-site prepair service, a feature not offered by other rivals in the local market Of course, a viable differentiation strategy must ensure that the value added to the customer by differentiation exceeds the firm's cost of providing the differentiation the cally, different strategies require different cost information, implying that cost systems may differ according to the strategy adopted by a firm.
Strategic Positioning
Incresing customer value to create a sustainable competitive advantage is achieved through judicious selection of strategies. Cost information plays a critical role in this process through a process called strategic cost management. Strategie Cost management is the use of cost data to develop and idenufy. firms choose a strategic position that corresponds to one of two general strategies. (1) cost leadership and (2) superior products through differrentiation. The objective of the cost leadership strategy is to provide the same of better value to customers a lower cost than competitors; its objective is to increase customer value by reduion sacrifice. For example,reducing the cost of making a product by improving a process would allow the firm to reduce the product's selling price, thus reducing customer sacrifice. A differentiation strategy, on the other hand, increases customer vlue by increasing realization. Providing customers with something not provided by competitors creates a competitive advantage. For exmple, a computer retailer could or on-site prepair service, a feature not offered by other rivals in the local market Of course, a viable differentiation strategy must ensure that the value added to the customer by differentiation exceeds the firm's cost of providing the differentiation the cally, different strategies require different cost information, implying that cost systems may differ according to the strategy adopted by a firm.
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