Podcast
Questions and Answers
Which of the following is the primary distinction between a manufacturing company and a trading company?
Which of the following is the primary distinction between a manufacturing company and a trading company?
- Trading companies produce their own products, while manufacturing companies trade products.
- Manufacturing companies focus on services, while trading companies focus on physical goods.
- Manufacturing companies produce their own products, while trading companies trade products. (correct)
- Trading companies require more capital investment compared to manufacturing companies.
Investment goods are used directly by consumers, such as surfboards or cakes.
Investment goods are used directly by consumers, such as surfboards or cakes.
False (B)
Besides 'type of product use', what is another criterion for classifying manufacturing companies?
Besides 'type of product use', what is another criterion for classifying manufacturing companies?
size of the manufacturing company
The 'Eintrittsbarriere' for start-ups in manufacturing can be very high, especially if the business is very ______.
The 'Eintrittsbarriere' for start-ups in manufacturing can be very high, especially if the business is very ______.
Match the manufacturing company with its product:
Match the manufacturing company with its product:
What does the business model of a manufacturing company focus on?
What does the business model of a manufacturing company focus on?
According to Michael Porter, a successful manufacturing company only needs one basic strategy.
According to Michael Porter, a successful manufacturing company only needs one basic strategy.
Name one of the basic strategies for being a successful manufacturing company, according to Michael Porter.
Name one of the basic strategies for being a successful manufacturing company, according to Michael Porter.
A bakery can justify a higher price if it offers ______ of baked goods.
A bakery can justify a higher price if it offers ______ of baked goods.
What is the primary competitive advantage that discounters pursue, according to the example provided?
What is the primary competitive advantage that discounters pursue, according to the example provided?
Flashcards
Manufacturing Company
Manufacturing Company
Companies that produce their own goods, differentiating them from trading companies.
Investment Goods
Investment Goods
Goods used in the production of other products, like a printing press.
Consumer Goods
Consumer Goods
Goods intended for direct consumption or use, such as food.
Business Model (Manufacturing)
Business Model (Manufacturing)
The plan to create a marketable product using company resources and labor.
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Differentiation Strategy
Differentiation Strategy
Making your product different from the competition, like better quality.
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Cost Leadership
Cost Leadership
Producing products at a lower cost than competitors.
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Niche Strategy
Niche Strategy
Focusing on a specific segment of the market with unique customer characteristics.
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Unique Selling Proposition (USP)
Unique Selling Proposition (USP)
What does the product offer that competitors don't?
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Quality in Bakeries
Quality in Bakeries
Maintaining high standards rather than competing on price. Often perceived as higher quality.
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- Manufacturing companies produce their own products, unlike trading companies.
- Examples of manufacturing companies:
- KTM (bicycles and motorcycles)
- Palfinger (cranes)
- Woerle (cheese)
- Bäckerei Schweiger (baked goods)
- Tischlerei Huber e.U. (joinery products)
- Classifications of manufacturing companies:
- Type of product: Investment goods vs consumer goods
- Investment goods are used to manufacture other products
- Consumer goods are for direct use/consumption
- Size: craft business vs industrial company
- Type of product: Investment goods vs consumer goods
Manufacturing Plant Characteristics
- Manufacturing companies can be plant-intensive.
- "Eintrittsbarriere" (barrier to entry) for start-ups can be high.
- Establishing a motorcycle production facility requires significant capital and experience.
- Smaller craft businesses often need permissions.
- The business model is to produce a marketable product using company assets and human labor.
- Production Factors:
- Human labor
- Fixed assets
- Current assets
Three Basic Strategies for Success
- Differentiation:
- The final product differs from those of competitors, typically in quality
- Cost Leadership:
- The product can be produced more cheaply than competitors because of cost advantages
- Niche Strategy:
- The product is designed for a niche market.
Considerations for Manufacturing Company Managers
- Questions to consider:
- Why would someone buy this product?
- What need does the product fulfill?
- Can the product stand out from competitors?
- What price will customers pay?
- Which sales channels to use?
- What quality standards must the product meet?
- What legal requirements apply?
- How can the product/idea/brand/design be protected?
- Will production be in-house or outsourced?
- What qualifications should employees have?
Bakery Example
- A bakery must offer better quality baked goods to justify its higher price compared to discounters.
- The bakery's ambiance enhances the shopping experience.
- Experienced bakers build consumer confidence.
- Trying to match discounter prices by sacrificing quality is a bad idea.
- Discounters pursue cost leadership through large production volumes.
- Cost advantages are passed on to consumers.
- Quality is not necessarily inferior, but the advantage is in quantity.
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