Done by : Nour Ouda Salam El-Helw Hadeel GarghonSupervised by: Dr. Nizar naim
In 2007, Hyundai motor company has put a new car on markets. The new car is “GENESIS” Genesis’ main consumer target is high-income grade. The reason of launching Genesis is that Hyundai motor will be target a high-grade car market over the world. Until 1990s, Hyundai was treated “ Cheep price, suitable quality “ In US car market.But, Global car market is more and more intense. So, Hyundai do not survive existing cost-leadership strategy.
In 2007, Hyundai motors has launching High-Class Premium Car“GENESIS” The Means of GENESIS is that Hyundai will be concentrate thepremium car market and Differentiation is new strategy on Hyundai.
1. What is the Competitive Advantage?2. Source of Global Competitive Advantage3. Competitive Advantage by Porter
The company will be able to apply to strong point Without being what does not evaluate a property and the ability which the company possesses Competition company comparison will lead and t he strong point which is relative could be grasped .The strategy which sees from viewpoint of competitiveadvantage Continuous a competitive advantage reinforcement a nd competitive advantage endeavors not to disappear
The reason of enterprise have a competitive advantage1. Customer satisfaction and loyalty increase, Increase of profit, Increase of market share → bring market perfomance2. The product offering which is value in the market→ competitive advantage offering valuable product and service3. various size and scope and profitability of company → The competitive advantage makes the base will be able to expand the enterprise which is various.
Competitive Advantage Cycle.Step 1. Source of Competitive Advantage Superior assets Super Capabilities Key Success FactorStep 2. Barriers to Imitation higher the barrier to entry to company When the new business opportunity coming from the Market which enters first mover advantage barriers to imitation
Step 3. Value proposal form of competitive advantage Operational Excellence Product Leadership Customer relationshipStep 4.Eencroachment aprevents of competitive advantage New competitive advantage position construction effort encroachment prevents of competitive advantage Reinvestment of profit asset and capability accumulation resource strengthen of competitive advantage
A Model of Competitive advantage Resources Distinctive Cost advantage Or ValueCompetencies Creation Differentiation advantage Capabilities
Main aspects of five forces analysis1. the rivalry between existing sellers in the market2. the potential threat of the entry of new competitors3. the threat of substitute products becoming available the market4. the bargaining power of consumer5. the bargaining power of suppliers
Competitive advantage strategies
1. Cost Leadership (Low Cost Strategy) produce goods level of equal more inexpensive,,(producing highly standerized product with lowest cost because of economies of scale .. Appropraite where business have high market share…2. differentiation (Differentiation Strategy)differentiating a product or service from the competitors products o r services. The differentiation may be in the product form, the bra nd image, features, technology, customer service, pricing or distri bution channels.3&4. Focus Cost Leadership / Differentiation: When competitions range is narrow, in other words when target on specific customer segment ,,will be focused cost leadership and differentiation strategy.
Source of Global competitive advantage Tapping the optimal MaximizingAdapting to Exploiting Exploiting locations knowledge local economies economies for transfer market of global of global activities acrossdifferences scale scope and location resources
1- Adapting to Local Market DifferencesCompanies must respond to the inevitable heterogeneity they willencounter in these markets.The company should consider that there is adifferences in language,culture, income levels, customer preferences, and distributionsystems. (a) (b) (c) Adapting Increased Improved Neutralizing to local market price local market share. realization. competitors. differences
Cont,, (a) Increased market share:Offering standard products and services across countries Cont,,reduces the boundaries of the served market to only thosecustomers whose needs are uniform across countries. (b) Improved price realization:- Tailoring products and services to the preferences of localcustomers enhances the value delivered to them.- A portion of this increased value should translate into higherprice realization for the firm
2- Exploiting Economies of Global Scale*Building a global presence automatically expands acompanys scale of operations, giving it larger revenuesand a larger asset base. *Potential benefits of economies of scale in various ways:spreading fixed costs, reducing capital and operatingcosts, pooling purchasing power, and creating criticalmass.
3- Exploiting Economies of Global ScopeGlobal scope refers to the multiplicity of regions andcountries in which a company markets its products andservices. (a) Providing coordinated services to global customers. (b) Market power compared with competitors • A global supplier has the opportunity to understand the unique strategic requirements and culture of its global customer.
4- Tapping the Optimal for Activities and resources Locations A firm that can exploit these intercountry differencesbetter than its competitors has the potential to createsignificant proprietary advantage (a) Performance enhancement. (b) Cost reduction. (c) Risk reduction.
5- Maximizing Knowledge Transfer Across Locations(a) Faster product and process innovation.(b) Lower cost innovation.(c) Reduced risk of competitive preemption.
How a firm can actually create and sustain acompetitive advantage in its industry?
Competitive strategy :is about being different. It meansdeliberately choosing to perform activities differently or toperform different activities than rivals to deliver a uniquemix of value.” -- Michael Porter (the father ofcompetitive strategy)
Two Basic Types Differentiation Cost LeadershipBoth can be more broadly approached or narrow,which results in the third viable competitive strategy
Approach 1 to Competitive advantage: Cost leadership- A firm sets out to become the low cost producer in its industry.- Note: a cost leader must achieve parity or at least proximity inthe bases of differentiation, even though it relies on costleadership for it’s CA.-Note: if more than one company aim for cost leadership,usually this is disastrous.- Often achieved by economies of scale-Examples of Cost Leadership: Nisson; Tesco; Dell
Competitive advantage model 2: Differentiation- a firm seeks to be unique in it’s industry along somedimensions that are widely valued by buyers.- Note: a differentiator cannot ignore it’s cost position. In allareas that do not affect it’s differentiation it should try todecrease cost…- differentiation can be applied: product, distribution, sales,marketing, service, image, etc.
Competitive advantage 3: Focus*a firm sets out to be best in a segment or group ofsegments.*variants: cost focus and differentiation focus.