Economies of Scale
Essay Preview: Economies of Scale
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Company strategy must be based on its intent to continue in the customer products business and it needs to take a long term horizon if it wishes to compete in the same.
Praxim needs to build its source of sustainable competitive advantage for staying customer product business for the long haul.
Strategy recommended:
Competitive advantage she says can be achieved through – Product differentiation, customer service and user-friendliness, alternative distribution, price, innovation. She also elaborates on the relative effectiveness and cost implication of these strategies.
Company is facing issue as value migrated from manufacturing and retailing capabilities to individualised customer support. If Praxim doesn’t factor everyone’s opinion and provide logical justification for its course, it may face talent attrition very soon.
Larry’s advocacy of online channel doesn’t factor online customer buying behaviour. Hence, generating demand over online platform is easier said than done. Company has to undertake this it is a risky proposition before validating the option to be ideal.
Strategy recommended:
George recommends Linda to gain deeper insights about brand equity and product strengths by engaging with end customers. He also advices her to constructively engage with Bob for understanding commercial side of the business and for gaining his confidence over key decisions taken by her.
He advices Praxim to choose only one out of the direct or indirect channel after carrying out detailed analysis of each option. He also recommends cost-effective testing of Linda’s option, as it can create valuable insights before deciding the fate of consumer business.
Implications:
George has advised keeping practical aspects of maintaining distribution networks in mind. This advice is therefore laden with a lot of personal business experience of George and should be considered carefully while deciding upon consumer business.
His recommendation to cost-effectively test the market is practical and a faster way of gaining market insights.
He does not advice upon the strategic orientation of Praxim and leaves it for the team to figure out based upon company’s competencies.