Competitive strategy theory Sample Clauses

Competitive strategy theory. ‌ The founder and representative of competitive strategy theory is Xxxxxxx Xxxxxx. He stressed that enterprise should connect with its own environment while setting its competitive strategy to point out that industry is the most direct environment of enterprise operation, and the structure of industry decides the competition rules, competition scope and strategic option. The core of enterprise strategy is competitive advantage which can be decided by two factors: the first one is the profitability of enterprise in its industry, which is the attractiveness of the industry. The second one is the relative competitive position in the industry. Therefore, enterprise should choose attractive industry if it want to obtain the competitive advantage. Surrounding this proposition, he presented the competition model of explaining and analyzing competitive condition and profitability which are based on five elements including supplier, purchaser, current competitor, substitute products and potential incomer. On the basis of this model, he allocated the selected industry and carried on the SWOT analysis (the interior strengths and weakness of enterprise, opportunity and threaten of industry) to the enterprise, provided three alternative competitive strategies: low cost strategy, variation strategy and centralization strategy (Xxxxxx, 1980). Then Xxxxxx presented concept of value chain in his book of COMPETITIVE ADVANTAGE. According to Xxxxxx’x (Xxxxxx, 1985) concept of value chain, enterprise is a composite of design, manufacturing, sales, transport, management etc. Its process of creating value can be resolved into a series of different but correlative value-added activities which form the value chain of enterprise. The value activity of enterprise can be divided into two broad categories: primary activity and support activity. The primary activity involves productions, sales, and after-sale service of transferring to the buyer which mainly includes five types: interior contradictions logistics (consist of purchasing logistics and production logistics), production and management, exterior logistics (consist of distribution logistics and reverse logistics group), sales and marketing and service. Support activity is one which has to assist the primary activity to finish its function which mainly including infrastructure of enterprise, human resource management, technological development, purchasing etc. Except the value activity, value chain also includes profit. Profit...
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