Firms can underestimate the challenges and expenses associated with coordinating value-creating activities in the extended value chain. This is an advantage of integrated overall cost leadership and differentiation.

Question

Quizplus · Accepted Answer

Integrating activities across the company value chain with the value chain of suppliers and customers involves a significant investment in financial and human resources. Firms must consider the expenses linked to technology investment, managerial time and commitment, and the involvement and investment required by the firm's customers and suppliers. The firm must be confident that it can generate a sufficient scale of operations and revenues to justify all associated expenses. Underestimating the challenges and expenses with coordinating value-creating activities in the extended value chain is a pitfall of integrated overall cost leadership and differentiation strategy.

Firms Can Underestimate the Challenges and Expenses Associated with Coordinating