OBS 114
Fundamentals of business management
Unit 12: Chapter 10: Value chain management: Functional strategies
for competitive advantage
1. FUNCTIONAL STRATEGIES, THE VALUE CHAIN AND
COMPETITIVE ADVANTAGE
Business – level 1. low-cost strategy – keep product prices low
strategies 2. differentiation strategy – make product superior to other
How to gain 1. Achieve superior efficiency
competitive The fewer the inputs required to produce a given
advantage output – the higher the efficiency
2. Achieve superior quality
Design, styling, performance and reliability superior
than other firm’s products
3. Achieve superior innovation, speed and flexibility
Something unique that competitors lack
4. Attain superior responsiveness to customers
Tries to satisfy customers’ needs and give them
exactly what they want
Provide excellent after-sales service
Functional Functional-level strategy:
strategies and A plan of action to improve the ability of an
value chain organisation’s functions
management to perform its task-specific activities in ways that add
value to an organisation’s goods and services
Value chain:
Coordinated series of functional activities necessary to
transform inputs into finished goods
Value chain management:
Development of a set of functional-level strategies
That support a company’s business level strategy and
strengthen its competitive advantage
The Value chain:
Product Materials
Customer
develop- Marketing manage- Production Sales
service
ment ment
1. Product development function
engineering/ scientific research involved in innovating
new/ improved products
Fundamentals of business management
Unit 12: Chapter 10: Value chain management: Functional strategies
for competitive advantage
1. FUNCTIONAL STRATEGIES, THE VALUE CHAIN AND
COMPETITIVE ADVANTAGE
Business – level 1. low-cost strategy – keep product prices low
strategies 2. differentiation strategy – make product superior to other
How to gain 1. Achieve superior efficiency
competitive The fewer the inputs required to produce a given
advantage output – the higher the efficiency
2. Achieve superior quality
Design, styling, performance and reliability superior
than other firm’s products
3. Achieve superior innovation, speed and flexibility
Something unique that competitors lack
4. Attain superior responsiveness to customers
Tries to satisfy customers’ needs and give them
exactly what they want
Provide excellent after-sales service
Functional Functional-level strategy:
strategies and A plan of action to improve the ability of an
value chain organisation’s functions
management to perform its task-specific activities in ways that add
value to an organisation’s goods and services
Value chain:
Coordinated series of functional activities necessary to
transform inputs into finished goods
Value chain management:
Development of a set of functional-level strategies
That support a company’s business level strategy and
strengthen its competitive advantage
The Value chain:
Product Materials
Customer
develop- Marketing manage- Production Sales
service
ment ment
1. Product development function
engineering/ scientific research involved in innovating
new/ improved products
