Chapter 3 & 4

Topics: Southwest Airlines, Innovation, Customer Pages: 4 (1536 words) Published: April 17, 2012
Chapter 3 #2 - When is a company's competitive advantage most likely to endure over time? A company's competitive advantage is most likely to endure over time when the company has built barriers to imitation, which make it difficult for a competitor to copy the company's distinctive competencies. Another element needed is the ability to quickly react to changes in the customer's needs and have a high absorptive capacity in order to identify, value, assimilate, and use new knowledge. Lastly, the company needs to have industry dynamism and be able to keep up with the rapidly changing environment with new innovative products. Company's need to be constantly protecting their investment from imitators, creating new innovative products and lowering cost structure to maintain their competitive advantage over time. Chapter 2 #3 - Is it possible for a company to be the lowest-cost producer in its industry and simultaneously have an output that is the most valued by the customers? Yes, There are four key factors that help companies build and sustain a competitive advantage: superior efficiency, quality, innovation, and customer responsiveness. Each of these distinctive competencies allow a company to differentiate its product and offer more utility or value to its customers and lowers the companies cost structure. First, when a company has superior efficiency they have fewer inputs required to produce a given output. For example, measuring employee productivity is a common measure of efficiency. If it takes one company A's employees 5 hours to produce a product and company B's employees take 8 hours to produce the same product, company A has a superior efficiency and is helping the company to attain a competitive advantage through a lower cost structure. Second, when a company's product is thought to have a both quality as excellence and reliability it gains competitive advantage in the market and customers are willing to pay more to own it or consume it. Third,...
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