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Essay / Research Paper Abstract
This 9 page paper is based on a scenario tool supplied by the student. Mikes Bikes want to expand and compete. The first part of the paper considers how they may compete according to Porters generic strategies and adjusts a draft strategy plan. The second part of the paper examines a four year scenario planning exercise, assessing the strengths and mistakes. The paper ends with the 5 year income statement. The bibliography cites 3 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEmikebike.rtf
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Unformatted sample text from the term paper:
single segment. The first two are cost advantage and differentiation. When looking at the Mikes Bike case there is the draft proposal to use cost advantage to compete.
In trying to undertake a cost advantage the company may seek to be the cost leader in either the industry, or just the relevant segment of the industry. In each
industry or segment only one company may occupy the cost leadership position. This means a company will "find and exploit all sources of cost advantage... [and] ... sell a standards
no frills product" (Porter, 1985; 13). This means that the cost to the firm of producing the good is lower than to its competitors. This may be due to economies
of scale as well as the way in which costs can be reduced, such as leveraging the power held over suppliers and contracting out labor. To summarize the cost
advantage this is seen as a strategy that bring goods of an acceptable quality to market, but has lower production costs than its competitors, is able to maintain that
cost gap and as a result benefits form higher than average profits. This is achieved by careful and effective management of the cost drivers for the business (Thompson, 2005).
The company in the Mikes Bikes scenario wishes to maintain quality as the same time as the cost advantage. This is not necessarily a clash, as the company needs to
provide the quality that is expected, and the adventure bike market is a high priced market. However, they are also seeking to compete with low prices, marketing this to companies.
The cost advantages do not necessarily mean that the company has to change the lowest prices, often the strategy will be with the use of middle of the market price.
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