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cost-based competition

influences on operations management presentation
by maayke louwerens on 12 November 2012

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Transcript of cost-based competition

Cost-based competition is derived from determining breakeven point (the level at which the firm matches total cost and total revenue) and then applying strategies to create cost advantages over competitors. COST-BASED COMPETITION 1. achieve economies of scale ways to reduce cost: 2. Bulk buy inputs 3. Eliminate waste 4. produce standardised products
for larger markets 5. produce high volume output 6. Use automated production
systems costs may be divided into those which are fixed and those which are variable.
fixed costs: are those that do not change regardless of the business activity level.
variable costs: costs that vary according to the business activity level (production level). cost-based competition & operations management The Tasmanian footwear group, blundstone, which has outsourced its manufactoring operations to Asia Because labour costs high in Australai case study:
"competing on cost"
operational managers in business that compete on cost prioritise their decision making based on reducing costs and improving productivity.
this is done by: 1. ensuring stable production processes
with limited interuption 2. ensuring all resources are used to
their optimum advantage 3. constantly looking for opportunities to
streamline production technology 4. updating facilities and equipment with
new, more efficient technology 5. providing trainging and development to
improve the skills and capabilities of employees. THANK YOU!
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