Briefly explain the concept of competitive advantage. The concept of competitive advantage is all about a characteristic of having an edge over another product or service that drives the customer to choose one product or service over another. This edge can be in the form of a functionality such as multi-simcard mobile phones, or mobile phones with a television feature.
It could be in the form of product design that makes the product more attractive and aesthetically desirable among a certain age group, gender or social class such as those belonging to Class A market, such as cars of the Sports Utility Vehicle (SUV) class. On the other hand, competitive advantage could be in the form of a noted durability and quality of a product with such as Sony television set, or an IBM computer, both of which are noted for this quality feature.
It can also pertain to the multi-feature of a product or service which increases its value but not much its price. It can be in the form of a cost advantage or differentiation advantage. In a market that is filled with competing products, the concept of competitive advantage drives the ultimate choice of the consumer on what product and service to patronize over the short, medium or long-term depending on the sustainability of the competitive edge. Hence, the concept of competitive advantage pertains to the uniqueness of a product of service.
Explain the concept of economies of scale and show how it relates to competitive advantage Economies of scale represents the cost advantages that an organization or business obtains due to reengineering and expansion. Likewise, this pertains to the factors that cause a manufacturer’s or producer’s average cost per unit to decrease or fall as production scale is increased. It is also a long run concept and may refer to the decrease or reductions in unit cost as the size of a production facility, or scale, increases.
Economies of scale may also pertain to the utilization of a production facility so that the manufacturing of a specific product becomes competitive in terms of cost. The reduction of the cost is due to the spreading of the fixed cost over a bigger volume of production to respond to an expanded market such as exports, special orders that likewise increases the number of units to cover a bigger demand or a bigger market. Why has Ford been unable to achieve full economies of scale in manufacturing and how is the new CEO planning to address this problem?
Ford has traditionally been a producer of big cars that had not been able to bring competition to its doors. With the assumption of a new CEO from Boeing, the concept of small cars found its way into the manufacturing processes using the same platform in producing the compact cars for the North American as well as the European market. With the introduction of small compact cars in the North American market, identical platforms as that used in other markets can support identical cars being produced and marketed in other markets.
Using the term global to describe the Ford Focus as a global brand, Ford Motors does not anticipate the model to manufactured differently which will entail higher production cost due to non-availment of that economies of scale. Thus, the rationalization of the production processes will likely result into a cost-savings advantage. . What does the Ford case show about the tension between Local and Global strategies? Local and global strategies, insofar as Ford Motors Company is concerned, vary greatly in terms of approaches.
Local strategies are what defines the marketing approaches that are confined to the local market and its workings. Global strategies indicate a more sophisticated marketing approach to a wider area and which requires a more comprehensive management of resources to stay competitive and relevant. The Ford case is an eye-opener for Ford itself. Its traditional view of car manufacturing has been confined to its own culture of bigness.
Thus, with smaller cars responding to a new global demand in and a response to the increasing world oil prices, the consumer market suddenly found an ally among oil producing and exporting countries. A new type of car, the global car is a sure winner for many. The tension between local and global standard at Ford Motors \company is an issue of sustainable competitive advantage in smaller cars that require common platforms, a lower production cost profile and a pocket friendly car with social relevance in terms of savings.
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