The past and present cost structure of a competitive company

Organizations go through an inevitable progression from growth through maturity, revival, and eventually decline. The broad corporate strategy alternatives, sometimes referred to as grand strategies, are: During the organizational life cycle, managements choose between growth, stability, or retrenchment strategies to overcome deteriorating trends in performance. Just as every product or business unit must follow a business strategy to improve its competitive position, every corporation must decide its orientation towards growth by asking the following three questions:

The past and present cost structure of a competitive company

A single, functional organization structure is in place —— all pricing is vested in a single organization and knowledge sharing and coordination with others is limited.

There are many ways your organization can begin improving its pricing processes. First, recognize the profound effect prices have on market performance and ultimately on long term growth and sustained profitability -- all of which are strategic imperatives for a company.

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Begin the journey to pricing maturity by establishing overarching goals that balance short-term financial objectives with market performance. When setting prices, distinguish between low and high intensity competitive environments and then price accordingly.

Competitive intensity does correlate with price sensitivity and can serve as a basic first step in price segmentation. While there are some pricing processes and methodologies in place, they are still Excel—based and as such may well be inconsistently applied across users, products, geographies, channels, etc.

Propagation and coordination of pricing plans and knowledge with other departments may be limited. Pricing is still at a tactical level and not yet used as a strategic driver.

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Score 6 External research findings, including customer and competitor research, if available, are used at this stage. This additional visibility into the market reveals market threats and opportunities and what price positioning is needed to maximize competitiveness.

If competitive data is not available, alternatives such as analyzing patterns in special price requests from customers can reveal indications of competitive activity and pricing. Vistaar can suggest a variety of alternatives. More can be done to advance to the next stage.

While competitiveness is being tracked, how they respond to your pricing moves is not; price leadership is crucial input for decision making.

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Furthermore, the common assumption that achieving both higher profitability and higher market share is not possible is not correct. Look for opportunities to improve both. Score 6 Also, recognize that price maturity entails more than setting list prices.

The past and present cost structure of a competitive company

In the next stage of pricing maturity, stage 3, companies gain additional benefit from well-managed price execution processes. Discount guidelines are established to guide and control pricing execution activity by field sales.

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Results are tracked and success is rewarded by linking achievement with commissions. As a start, imposing simple price enforcement ranges floor and ceiling levels will produce benefits. Then, vary the guidelines applied to each customer segment.

At this level, pricing guidelines are maintained for field sales execution. Elasticity-based pricing methods, such as bid-optimization and others are being used.

Win-loss data is saved and applied. The best technique for setting list prices is used as each situation warrants. Competitor and customer responses to pricing moves are tracked and assessed; and, pricing strategy refined accordingly.

Price leadership situations are identified and exploited.A competitive analysis is a critical part of your company marketing plan.

, marketing objectives and assumptions, current and past strategies, organizational and cost structure, strengths and. As just mentioned, the purpose of the case study is to let you apply the concepts you've learned when you analyze the issues facing a specific company.

The Past and Future of Competitive Advantage By Clayton Christensen The author introduces to us that the concept of competitive advantage has inspired strategists in imitating the . In economics and business decision-making, a sunk cost is a cost that has already been incurred and cannot be recovered (also known as retrospective cost)..

Sunk costs are sometimes contrasted with prospective costs, which are future costs that may be incurred or changed if an action is that regard, both retrospective and prospective costs could be either fixed costs (continuous for. Achieving a competitive cost structure is a critical component of Bell’s broadband leadership strategy, enabling us to stay ahead of our rivals in network investment and innovation, continually enhance our service operations, effectively manage our debt and pension obligations, and deliver sustainable dividend growth to our shareholders.

Without competitive advantage a company risk of being beaten by stronger rivals hence to set strategy that put them apart from rivals in the mane of achieving .

What is cost? definition and meaning -