Comp analysis 5


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Comp analysis 5

  2. 2. Factors of competitive advantage of a company <ul><li>Quality </li></ul><ul><li>Customer Responsiveness </li></ul><ul><li>Efficiency </li></ul><ul><li>Innovation </li></ul>
  3. 3. Prime sources of competency <ul><li>Resources </li></ul><ul><li>- that help strengthen demand for a company’s product </li></ul><ul><li>Capabilities/Company Skills </li></ul><ul><ul><li>- at coordinating its resources and putting them to productive use. </li></ul></ul>
  4. 4. Resource type <ul><li>Financial </li></ul><ul><li>Physical </li></ul><ul><li>Human </li></ul><ul><li>Technological </li></ul><ul><li>Organizational </li></ul>
  5. 5. Resource type <ul><li>Tangible </li></ul><ul><li>- land, buildings, plant and equipment </li></ul><ul><li>Intangible </li></ul><ul><ul><li>- brand names, reputation, patents, technological or marketing know-how </li></ul></ul>
  6. 6. Capabilities <ul><li>A company’s capabilities are the product of its organizational structure and culture. </li></ul><ul><li>They specify how and where decisions are made within a company: </li></ul><ul><li>- the kind of behaviour, </li></ul><ul><li>- the company rewards and incentive, </li></ul><ul><li>- the company’s cultural norms and values. </li></ul>
  7. 7. Competitive Advantage <ul><li>A company may have unique and valuable resources but unless it has the capability to use these resources effectively it may not be able to create or sustain a distinctive competitive advantage. </li></ul><ul><li>Honda using its distinctive competency in the design and manufacture of high-powered lightweight engines to move from motor cycles to cars, lawn mowers and four-wheel off-road buggies. </li></ul>
  8. 8. Luck <ul><li>Can luck be a factor in competitive advantage? </li></ul><ul><li>- Microsoft was lucky with Q-DOS </li></ul><ul><li>- Japanese had luck in getting foothold in US market </li></ul>
  9. 9. Sustaining a competitive advantage Factors affecting that competition <ul><li>#1. BARRIERS TO IMITATION </li></ul><ul><li>Tangible such as plant and equipment are easily imitated than intangibles such as brand name or marketing or technological know-how. </li></ul><ul><li>- Marketing strategies can also be easily copies such as Coca Cola imitating Diet Pepsi. </li></ul>
  10. 10. Sustaining a competitive advantage <ul><li># 2. CAPABILITY OF COMPETITORS </li></ul><ul><li>Can you identify why 3M is so successful at developing new products? </li></ul><ul><li>Hire the relevant people from the competitor? Mostly it is the team that delivers the result. </li></ul>
  11. 11. Sustaining a competitive advantage <ul><li># 3. INDUSTRY DYNAMISM </li></ul><ul><li>In a dynamic industry environment where the life cycle of a product is short such as in personal computer competitive advantage can be very transitory as a product today can be made obsolete tomorrow by a competitor’s innovation. </li></ul>
  12. 12. Why do companies fail? <ul><li>Companies find it difficult to change their strategies and structures in order to adapt the changing competitive conditions. Examples </li></ul><ul><li>- DEC refusing to go micro during the 80s </li></ul><ul><li>- IBM finding it difficult to accept the shift from mainframe to small, low-priced personal computers. </li></ul>
  13. 13. Inertia <ul><li>Organizational capabilities are the reason for the inertia as certain distribution of power and influence rests within the established decision-making and management processes of the organization. </li></ul><ul><li>Prior strategic commitment can also be a stumbling bloc. </li></ul>
  14. 14. Icarus Paradox <ul><li>The Icarus Paradox is an obsession with ones present strategy that has been doing so well such as DEC refusing to budge from Mini or Wang from its word </li></ul><ul><li>processors. </li></ul>
  15. 15. Things to Do <ul><li>What should a company do to avoid the pitfalls on the path to competitive advantage? </li></ul><ul><li>- Focus on the building blocks of competitive advantage </li></ul><ul><li>- Institute Continuous Improvement and Learning </li></ul><ul><li>- Track best industrial practices through benchmarking </li></ul>
  16. 16. SWOT strength/weakness <ul><li>Financial Resources </li></ul><ul><li>Economy of Scale </li></ul><ul><li>Experience Curve </li></ul><ul><li>Skills – technological, marketing, management </li></ul><ul><li>Core Competence </li></ul>
  17. 17. SWOT strength/weakness <ul><li>Capability – Innovation (R&D) </li></ul><ul><li>Processing (manufacturing, distribution) </li></ul><ul><li>Patent/Copyright </li></ul><ul><li>Market Image (Customer perception) </li></ul><ul><li>Profitability (par, above or below) </li></ul>
  18. 18. SWOT opportunity <ul><li>Emerging new technologies </li></ul><ul><li>Ability to transfer technology to new skills </li></ul><ul><li>Falling trade barriers in attractive foreign markets </li></ul>
  19. 19. SWOT opportunity <ul><li>Means to broaden product line to meet broader range of customer needs </li></ul><ul><li>Integrating forward and backward </li></ul><ul><li>Complacency among rivals </li></ul>
  20. 20. SWOT threat <ul><li>Entry of low-cost foreign competitors </li></ul><ul><li>Rising sales of substitutes </li></ul><ul><li>Slower market growth </li></ul><ul><li>Costly regulatory requirements </li></ul><ul><li>Adverse shift in foreign exchange rates </li></ul>
  21. 21. SWOT threat <ul><li>Adverse demographic changes </li></ul><ul><li>Changing buyer needs and tastes </li></ul><ul><li>Growing customer/supplier bargaining power </li></ul><ul><li>Vulnerability to recession or business cycle </li></ul>