Answer to Question #315189 in Management for ssu

Question

A pharmaceutical company is running an offline store and also have good customer

base. Company faced lots of challenge due to online pharmaceutical players. Online

medicine delivery is a new concept in the industry, and customers are accepting this

business model slowly.

a. Explain the existing situation of the firm considering the industry life cycle.

b.Explain different competitive advantage that helps a company to get a better market

share in the market.

Answer 1

a) The existing situation of the firm is at the growth stage where it has attracted attention from a bigger market segment, the industry moves on to the growth stage where profitability starts to rise. Improvement in product features increases the value to customers. Complementary products also start to become available in the market, so people have greater benefits from purchasing the product and its complements. As demand increases, product price goes down, which further increases customer demand. At the growth stage, revenue continues to rise and companies start generating positive cash flows and profits as product revenue and costs surpass break-even. At this level, the company is trying to restructure itself and come up with new technologies to make it competitive in the market to have market share.

b) Competitive advantages are attributed to a variety of factors including cost structure, branding, the quality of product offerings, the distribution network, intellectual property, and customer service. Competitive advantages generate greater value for a firm and its shareholders because of certain strengths or conditions. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.