Purpose – The purpose of this thesis is to identify the critical competitive priorities and capabilities that enables competitive manufacturing in the high cost environment of Sweden and how these can be improved to increase manufacturing performance.

Method – The purpose of this thesis was achieved through two main research methods. First a systematic literature review was conducted in order to condensate the existing literature on competitive priorities and capabilities. Secondly a case study was conducted in order to examine the identified competitive priorities and capabilities in the context of a high cost environment.

Findings – Initially, a set of articles were identified and included in the literature review. Through an analysis of the included articles, a framework was created including competitive priorities and competitive capabilities. A comparison between the framework and the empirical data collected at the case company identified a number of priorities and capabilities considered critical for competitive manufacturing in a high cost environment. The literature review revealed a set of improvement actions and methods that could be used to improve the identified critical competitive priorities and capabilities in order to increase manufacturing performance.

Implications – The thesis makes a theoretical contribution by condensing the existing literature on competitive priorities and capabilities in a high cost environment, and creates a starting point for future research. Further it makes a practical contribution by providing awareness for practitioners regarding priorities and capabilities, what may be important in the future, and how these could be improved.

Limitations – This study identifies how critical priorities and capabilities can be improved, however, it does not specify how they can or should be applied and used. Additionally, the inclusion criteria in the systematic literature review did not include improvement actions and thus other suggestions for improvements may not be included. The case study was limited to one company, making the result difficult to generalize.