CHAPTER 4: DEVELOPING A COMPETITIVE STRATEGY;

CONTEMPORARY COST MANAGEMENT TECHNIQUES

Exercise 1 (Strategy, Competitive Advantage)

In the mid-1970s a large retailer of auto parts, Best Parts, Inc. (BPI), was looking for ways to
invest an accumulation of excess cash. BPI’s success was built on a carefully developed
inventory control system that guaranteed a customer would be able to purchase a desired part 99
percent of the time on demand, and the remaining 1 percent of the time within one business day.
The speed and quality of service set BPI apart from other parts dealers, and the business
continued to grow.

On the advice of close friends and consultants, the owner and CEO of BPI decided to invest a

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significant portion of the excess cash in a small chain of gift and craft stores. The stores would be

co
placed in shopping malls.

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Required:

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Determine the competitive advantage (cost leadership, or differentiation) of BPI in the auto-parts
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business. Assess how this competitive advantage would or would not facilitate success in the
new venture.
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 Based on the given data, Best Parts, Inc. (BPI) used the differentiation
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competitive strategy. The company uses the strategy of implementing speed and
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quality of service to excel from other parts dealer. The sector of small chain of
gifts or specialty store in shopping malls is somewhat distinct from the company
of auto parts since competitive strategies cannot assure to succeed in shopping
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malls.
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