Discuss how firms may develop cost advantage and differentiation advantage. Essay Help

1. Discuss how firms may develop cost advantage and differentiation advantage. ? Students should explain the two types of competitive advantage in terms of Porter’s generic strategies framework. ? Better answers will identify and describe the drivers of cost advantage (e.g. economies of scale and learning, process improvement, etc.) and potential sources of uniqueness (e.g. product features and performance, complementary services, etc.). 2. Explain which of the activities that are typically represented by a Value Chain might be leveraged by a telephone handset manufacturer and retailer in order to gain cost or differentiation advantage, and why. ? Students should illustrate the likely value chain of a mobile phone handset manufacturer, and use that to describe how either cost or differentiation advantage may be gained. ? Cost advantage could come from lowering inputs via cheaper materials, lower shipping costs, increased automation, fewer defects, reduced staff costs, etc. ? Differentiation advantage involves finding ways to provide value to customers via quality, technology, product features, after-sales support, etc. ? Stronger answers will not just describe but also critique the frameworks. 3. Compare the differing insights that might be gathered from PESTEL and Porter’s Five Forces analyses of the budget airline industry, adopting a critical approach to the two frameworks. ? PESTEL enables the classification of external influences by source: political; economic; social; technological; environmental; legal. ? Porter’s Five Forces identifies five sources of competitive pressure that influence the profitability and attractiveness of an industry. ? Better answers will show good criticality, identifying and discussing the strengths and weaknesses of each technique. 4. Describe the 6 models that can be used for strategy development, making a distinction between externally and internally-based models. Give two examples, one from each group, explaining why such a model is appropriate.

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