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Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
Technology and Traditional Sources of Competitive Advantage
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Technology and Traditional Sources of Competitive Advantage

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  • 1. Technology and Traditional Sources of Competitive Advantage Tonje Hovland Berntsen
  • 2. Classical Source of Competitive Advantage <ul><li>The classical sources of competitive advantage: </li></ul><ul><li>Low-cost strategy </li></ul><ul><li>Differentiation strategy </li></ul>
  • 3. Generic Competitive Strategy Matrix
  • 4. Cost-Based Strategies <ul><li>Discussion Question: </li></ul><ul><li>How do cost-based strategies (cost advantages) provide a powerful competitive advantage? </li></ul><ul><li>Pursue options unavailabe to other firms </li></ul><ul><li>Lower cost base  ability to win on price and gain market share and volume </li></ul><ul><li>Win on profit margin and reinvest for further competitive advantage </li></ul>
  • 5. Technology and Cost Reduction
  • 6. Technology and Cost Reduction <ul><li>Porter’s 10 cost drivers: </li></ul><ul><li>Economies of scale </li></ul><ul><li>Learning </li></ul><ul><li>Capacity utilization </li></ul><ul><li>Linkages among activities </li></ul><ul><li>Interrelationships among business units </li></ul><ul><li>Degree of vertical integration </li></ul><ul><li>Timing of market entry </li></ul><ul><li>Firm’s policy of cost or differentiation </li></ul><ul><li>Geographic location </li></ul><ul><li>Institutional factors </li></ul>
  • 7. Technology and Cost Reduction
  • 8. Wal-Mart <ul><li>One of the most efficient retail operators in the world </li></ul><ul><li>Grown at a double-digit annual pace </li></ul><ul><li>2 million employees </li></ul><ul><li>Technology or scale and supply chain capabilities? </li></ul><ul><li>http://www.youtube.com/watch?v=b5K1yrICMII </li></ul>
  • 9. Total Cost of Ownership (TCO) <ul><li>TCO: </li></ul><ul><li>A tool to assess both direct and indirect costs and benefits </li></ul><ul><li>Integration costs </li></ul><ul><li>Maintainance and support costs </li></ul><ul><ul><li>Learning </li></ul></ul><ul><li>Ambiguities in process change </li></ul><ul><ul><li>New technology  Change </li></ul></ul>
  • 10. Total Cost of Ownership (TCO)
  • 11. Cost-Based Strategies - Challenges <ul><li>Organizational change  Cost savings </li></ul><ul><li>Easy to become over-reliant on cost-based advantage </li></ul><ul><li>Innovation is the determinator </li></ul>
  • 12. Differentiation-Based Strategies <ul><li>Discussion Question: </li></ul><ul><li>What makes a differentiation strategy different from a cost-based strategy? </li></ul><ul><li>Highly ambiguous measure </li></ul><ul><li>Multiple valuable and unique attributes </li></ul><ul><li>Multiple firms can succeed </li></ul><ul><li>Customer based </li></ul>
  • 13. Technology and Differentiation <ul><li>Drivers of success in differentiation: </li></ul><ul><li>In-depth understanding of the target customer base </li></ul><ul><ul><li>Relevance </li></ul></ul><ul><ul><li>Tradeoffs </li></ul></ul><ul><li>The ability to generate uniqueness </li></ul>
  • 14. Technology and Differentiation <ul><li>Three approaches to creating a potentially unique application: </li></ul><ul><li>As an integral part of a product or service </li></ul><ul><li>Indirectly in the production of the product or service </li></ul><ul><li>Through the delivery of the product or service </li></ul>
  • 15. Differentiation - Challenges <ul><li>A misstep can result in added cost or negative value </li></ul><ul><li>Changing customer preferences and substitute offerings </li></ul><ul><li>” Differentiate its differentiation” </li></ul><ul><ul><ul><li>Image/Reputation </li></ul></ul></ul><ul><ul><ul><li>Time in business </li></ul></ul></ul><ul><ul><ul><li>Installed base </li></ul></ul></ul><ul><ul><ul><li>Visibility </li></ul></ul></ul><ul><ul><ul><li>Market share </li></ul></ul></ul>
  • 16. Narrow or Broad Customer Target? <ul><li>Important issues determining focus: </li></ul><ul><li>The extent to which individual segments are homogenous and unique in their needs </li></ul><ul><li>The ability of the firm to develop unique advantages aimed at a segment </li></ul>
  • 17. Pursuing Both Strategies
  • 18. Questions or comments? Thank you!!
  • 19. References <ul><li>http://www.atwebo.com/porter%27s_comptetitive_strategy.htm </li></ul><ul><li>http://www.netmba.com/strategy/value-chain/ </li></ul><ul><li>http://searchdatacenter.techtarget.com/sDefinition/0,,sid80_gci342316,00.html </li></ul><ul><li>http://www.tascomi.com/images/elements/lcow.gif </li></ul>

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