Your SlideShare is downloading. ×
Ch07
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Ch07

503
views

Published on

Published in: Business

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
503
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
34
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 8
  • 7
  • Transcript

    • 1. The Nature and Sources of Competitive Advantage
      • The emergence of competitive advantage
      • Sustaining competitive advantage
      • Competitive advantage in different market settings
      • Types of competitive advantage: cost and differentiation
      OUTLINE
    • 2. The Emergence of Competitive Advantage How does competitive advantage emerge?
      • External sources of
      • change e.g.:
      • Changing customer demand
      • Changing prices
      • Technological change
      Internal sources of change Resource heterogeneity among firms means differential impact Some firms faster and more effective in exploiting change Some firms have greater creative and innovative capability
    • 3. Competitive Advantage from Internally-Generated Change: Strategic Innovation
      • Characteristics of innovatory strategies:
        • Associated with new entrants to an industry (e.g. Nucor in steel, IKEA in furniture, Home Depot in DIY , Dell in PCs, American Apparel in casual clothing )
        • Reconcile conflicting performance goals (e.g. Toyota’s lean production system combines low cost, high quality, and flexibility. Retailers Primark and Target combine low cost with stylishness.)
        • Reconfiguring the value chain e.g.---
          • Nike’s system for manufacturing and distributing shoes totally different from traditional shoe manufacturer
          • Southwest Airlines simplification of the normal airline value chain
          • Zara’s system of design, manufacture, and distribution
    • 4. Sustaining Competitive Advantage Against Imitation REQUIREMENT FOR IMITATION Identification - Obscure superior performance - Deterrence --signal aggressive Incentives for imitation intentions to imitators - Pre-emption --exploit all available investment opportunities - Rely upon multiple sources of Diagnosis competitive advantage to create “ causal ambiguity” - Base competitive advantage upon Resource acquisition resources and capabilities that are immobile and difficult to replicate ISOLATING MECHANISM
    • 5. Competitive Advantage in Different Industry Settings: Trading Markets and Production Markets TRADING MARKETS
      • None (efficient markets)
      • Imperfect information
      • Transactions costs
      • Systematic behavioral trends
      • Overshooting
      None Insider trading Cost minimization Superior diagnosis (e.g. chart analysis) Contrarianism PRODUCTION MARKETS
      • Barriers to imitation
      • Barriers to innovation
      Identify potential barriers to imitation (e.g. deterrence, preemption, causal ambiguity, resource immobility, etc.) & base strategy upon them. Difficult to influence or exploit. MARKET TYPE SOURCE OF IMPERFECTION OF COMPETITION OPPORTUNITY FOR COMPETITIVE ADVANTAGE
    • 6. Sources of Competitive Advantage COST ADVANTAGE DIFFERENTIATION ADVANTAGE COMPETITIVE ADVANTAGE Similar product at lower cost Price premium from unique product
    • 7. Porter’s Generic Strategies SOURCE OF COMPETITIVE ADVANTAGE Low cost Differentiation Industry-wide COST DIFFERENTIATION COMPETITIVE LEADERSHIP SCOPE Single Segment F O C U S
    • 8. Features of Cost Leadership and Differentiation Strategies
      • Generic strategy Key strategy elements Resource & organizational
      • requirements
      • COST Scale-efficient plants. Access to capital. Process
      • LEADERSHIP Design for manufacture. engineering skills. Frequent
      • Control of overheads & reports. Tight cost control.
      • R&D. Avoidance of Specialization of jobs and
      • marginal customer functions. Incentives for
      • accounts. quantitative targets.
      • DIFFERENTIATION Emphasis on branding Marketing. Product
      • and brand advertising, engineering. Creativity.
      • design, service, and Product R&D
      • quality. Qualitative measurement and incentives. Strong cross-functional coordination.