2. Introduction
• Single market for everyone
• Demands to create value for multiple stakeholders
• Multiple competitors
• Survival is to compete effectively
• Decision on how and basis of competition at the market place
must be highly considered
3. Learning Objectives
Upon completion of this lecture you will be able to:
• Explain the approaches to achieving sustainable competitive
advantage
• Compare and contrast alternative approaches to strategy development
5. Competitiveness and Competitive
Advantage
• Competitiveness
Ability of organisation to compete against other organisations
• Competitive Advantage
Situations where an organisation exerts more competitive force on
its competitors than they exert on it. (CIMA)
• Sustainable Competitive Advantage
Staying ahead of competitors for a longer-term
6. Porter’s Three (3) Generic Strategies
According to Michael Porter, organisations can generate superior
competitive performance through:
• Cost Leadership – offering product and services of the same
quality as competitors but at lower prices
• Differentiation – charging higher prices by offering more
innovative product, or product with higher perceived quality
• Focus – concentrating on a small part of the market
Reading Assignment: Bowman’s Strategic Clock
7. Positioning and Resource-Based View of
Strategy
• The Positioning View:
Competitive advantage stemming from the organisation’s position
in relation to its customers, competitors, and other stakeholders. It
is also called “outside-in” view
• Positioning approach to strategy takes the view that super-
normal profit results from:
High market share relative to rivals
Differentiated product
Low cost
8. Resource-Based View of Strategy
• Resource-Based View:
Competitive advantage stemming from some unique resource
or competence posses by the firm. This is also called an
“inside-out” view
It is concerned with resources (things the organisation has at
disposal), and competence (effective and efficient way of doing
things
9. Principles of Resource-Based View
• Sustainable profitability depends on possession of unique
resources or abilities that cannot be duplicated
• Resource-Based View:
Competitive advantage stemming from some unique resource
or competence posses by the firm. This is also called an
“inside-out” view
It is concerned with resources (things the organisation has at
disposal), and competence (effective and efficient way of doing
things
10. Principles of Resource-Based View Cont’
• Criteria for unique resource (Barney 1991)
Valuable – ability to exploit opportunities or neutralise threats
Rare – competitors must not have them
Imperfectly imitable – competitors must not be able to
duplicate
Non-substitutability – it must not be possible for a rival to
find a substitute for the resource
11. Principles of Resource-Based View Cont’
• Types of Competence
Threshold Competences – actions and processes that a firm
must be good at, just to be considered for business
Core Competence – something that a firm is able to do that is
very difficult for competitors to emulate
12. Principles of Resource-Based View Cont’
• Two key techniques for Resource and Competence Appraisal
Resource Audit– seeks to establish the strategic capability
of the organisation
RESOURCES
• Physical
• Human
• Financial
• intangible
STRATEGIC
CAPABILITY
COMPETENCES
• Using resources
effectively
• What the
company is good
at
BASIC
• Similar to
competitors
• Easy to copy
UNIQUE
• Different
• Hard for others
to attain
• Give strong
competitive
position
THRESHOLD
• The minimum
required to be
able to
compete in a
chosen market
CORE
• Basis for
competitive
advantage
• Must be rare
• Hard to imitate
• Valued by
customers
13. Porter’s Value Chain
• Value Activity is a physically and technologically competitive
distinct activity that an organisation performs
• The concept of adding value is essential to sustainable
competitive advantage
