Predicting and Developing a Long Term Growth Strategy

Predicting and Developing a Long Term Growth Strategy
What can you learn from the financial statements of competitors that determine the relative cost position of your company?
Instead of focusing only on the company’s financial reports to analyze its performance and make future plans, it is also appropriate to analyze the competitors’ financial statements. From their financial reports, the company will learn the competitor’s financial performance by computing various financial ratios (McLaney, 2012). Ratios assists in determining competitors’ level of performance with respect to leverage, liquidity, current ratios among others
Other information that can be retrieved from the reports is competitors’ market share, how buyers perceive competitor’s products and services, their financial strength and weaknesses and the ability to respond to the market demands (Porter, 1998).
What are some of the ways in which you can secure a sustainable cost advantage over the competition?
A company can gain cost advantage through the applying the services of skilled labor/workforce that will improve on efficiency and reduce material waste. Through the access of cheap raw materials than the competitors will help a company to produce and sell at low costs to gain competitive advantage (Pfeifer, Haskins, & Conroy, 2005). Third, the Company can control its operational cost and expenses to maximize on efficiency of the products provided to the market.
How does maintaining a strong understanding of relative costs help you maintain a competitive advantage?
Many Consumers are influenced by costs of products when considering making a purchase. Through analyzing the costing methods used by the competitors, the firm will implement cost strategy that gives it the most efficient way of attracting a majority of the customers in the market. The focus should be paid on maintaining sustainable low production costs and high product quality (McLaney, 2012). The two factors would result into low product prices which in return attracts a large market share.
How do you use cost structure to differentiate products? Do you think product differentiation is a successful growth strategy? Why or why not?

Cost differentiation is considered to be a vital tool in the growth strategy and competitive advantage. Consider a situation where products attributes and quality of products in the industry are similar. A company might use the cost as a way of making their products unique from others. Cost advantage can be traced back to the cost structure used in an organization (Porter, 1998). It is difficult to control the market using cost advantage alone for a long period. Hence, there is a need to incorporate other factors for example quality and technology in the production.

What is the usefulness of conducting a customer profitability analysis?

Customer Profitability (CP) analysis assists a company to identify the amount of net income it has obtains from each of its clients. The analysis can also be used to classify the customers into platinum customers, Gold Customers, Iron Customers and Lead customers. From the classification, the company will analyze the needs of each client then develop specific ways to meet them (Pfeifer, Haskins, & Conroy, 2005).
CP analysis can also be used to compare the cost incurred in the production of specific products to a specific client against the profit earned. The analysis is used as a decision-making technique to determine if it is worth engaging in business with certain customers (Pfeifer, Haskins, & Conroy, 2005).After carrying The Customer Profitability analysis, a firm will be in a position to determine whether to continue engaging with the customer or determinate the engagement.

References
McLaney, D. P. (2012). Accounting and Finance for Non-Specialist. Washington D.C: Pearson; 8 edition.
Pfeifer, P., Haskins, M., & Conroy, a. R. (2005). Customer Lifetime Value, Customer Profitability, and the Treatment of Acquisition Spending. Journal of Managerial Issues , 17 (1), 11-25.
Porter, M. E. (1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press; 1 edition ISBN-13: 978-0684841489.