The business entity must have to earn competitive advantage and for that purpose at the stage of turnaround, differentiation is not possible as the entity is stuck in the middle. The only option for the business entity is to earn competitive advantage in the form of ‘COST’. Cost advantage can be earned if the activities performed by the business entity are relooked as stated in the blog dated 01.07. 2018 contained the ways in which money goes out of business organisation and the same was stated to be activities. In fact activities are nucleus of competitive advantage. M. E. Porter is its article ‘What is strategy’ stated –
Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services. Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly differentiation arises from both the choice of activities and how they are performed. Activities are the basic units of competitive advantage. Overall advantage or disadvantage results from all a company’s activities, not only a few.
Process flow depicting the ways and means of cost reduction is as below: