Business Model vs Competitive Advantage

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Creating competitive advantage is a component of your business model. Learn how the two inter-relate in this PowerPoint.

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Business Model vs Competitive Advantage

  1. 1. BUSINESS MODEL VS COMPETITIVE ADVANTAGE
  2. 2. What is a business model?
  3. 3. The proprietary method used to acquire, service, and retain customers
  4. 4. Let’s examine McDonalds
  5. 5. Their business model is Franchise model - It’s a fast food chain catering to the masses - Franchisee buys license to operate business - Franchisee income derived by (Revenue – royalty) - Franchisor provides branding, training, etc. in exchange for royalty fees - The network spans all over the world
  6. 6. Clearly, their model is working VERY well Network - 31,000+ locations worldwide Employees (2008) - 400,000 worldwide Financial (2008) - Net Income US$4.3bn - Revenue US$22.6bn Brand Equity (InterBrand 2009) - 6th top brand worth US$32bn
  7. 7. What about competitive advantage? - What you do BEST and BETTER than others - Two types of competitive advantage(s) according to Michael Porter a) Cost Advantage b) Differentiation Advantage
  8. 8. What’s McDonalds competitive advantage? Key Competitive Advantages - One the world’s top brand TODAY - Earned reputation for fast service - Earned reputation for cleanliness - Standardized menu thus easier to manage - Located almost anywhere in the world - World’s largest owner of corner lots - Scale - 31,000 locations vs. Burger King’s 12,000
  9. 9. McDonalds is not alone though…
  10. 10. Thus, McDonalds need to continuously compete Possible Strategies include - Continue to out-advertise - Open more branches to gain market share - Invest heavily in training and development - Review pricing to continuously attract customers - Make their menus “HEALTHIER”

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