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Competitive Advantage RG

1. Competitive advantage exists when a firm can deliver the same benefits as competitors but at a lower cost or through differentiation. 2. Most competitive advantages cannot be sustained long-term as profits attract imitation, but sustainable advantages come from value-creating processes and positions that cannot be duplicated. 3. Competitive advantages arise from using core competencies skillfully to gain advantage through cost leadership or differentiation against industry rivals.

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405 views

Competitive Advantage RG

1. Competitive advantage exists when a firm can deliver the same benefits as competitors but at a lower cost or through differentiation. 2. Most competitive advantages cannot be sustained long-term as profits attract imitation, but sustainable advantages come from value-creating processes and positions that cannot be duplicated. 3. Competitive advantages arise from using core competencies skillfully to gain advantage through cost leadership or differentiation against industry rivals.

Uploaded by

Aditya
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Feb 8, 2010 competitive advantages

Competitive advantage
Competitive advantage is a position a firm
occupies against its competitors
When a firm sustains profits that exceed the
average for its industry, the firm is said to
possess a competitive advantage over its
rivals. The goal of much of business strategy
is to achieve a sustainable competitive
advantage.

competitive advantages
A competitive advantage exists when the firm is
able to deliver the same benefits as
competitors but at a lower cost .

competitive advantages 3
Most forms of competitive advantage
cannot be sustained for any length of time
because the profit invites competitors to
duplicate the competitive advantage held
by any one firm.

competitive advantages 4
A firm possesses a sustainable competitive
advantage when its value-creating processes
and position cannot be duplicated or imitated
by other firms.

competitive advantages 5
The source of competitive advantage for any
business operating in an industry arises from
the skillful use of its core competencies.
The competencies are used to gain competitive
advantage against rivals in an industry

competitive advantages
 Michael Porter identified two basic types of
competitive advantages

1.

2.

competitive advantages 7
Cost advantage
Cost advantage occurs when a firm
delivers the same services as its
competitors but at a lower cost.

competitive advantages
Differentiation advantage
 Differentiation advantage occurs when a firm
delivers greater services for the same price
of its competitors. They are collectively
known as positional advantages because
they denote the firm's position in its industry
as a leader in either superior services or
cost.

competitive advantages
competitive advantages
A Model of Competitive Advantage

Cost Advantage
Distinctive Competencies Or Value creation
Differentiation Advantage

Capabilities

competitive advantages
Resources and Capabilities
 According to the resource-based view, in
order to develop a competitive advantage
the firm must have resources and
capabilities that are superior to those of its
competitors. Without this superiority, the
competitors simply could replicate what the
firm was doing and any advantage quickly
would disappear.

competitive advantages
Resources and Capabilities

Resources and Capabilities

Capabilities
Resources

competitive advantages
Resources
 Resources are the firm-specific assets useful for
creating a cost or differentiation advantage and
that few competitors can acquire easily. The
following are some examples of such resources:
 Patents and trademarks
 Proprietary know-how
 Installed customer base
 Reputation of the firm
 Brand equity

competitive advantages
Capabilities
 Capabilities refer to the firm's ability to utilize
its resources effectively. An example of a
capability is the ability to bring a product to
market faster than competitors. Such
capabilities are embedded in the routines of
the organization and are not easily
documented as procedures and thus are
difficult for competitors to replicate.

competitive advantages
 The firm's resources and capabilities
together form its distinctive competencies.
These competencies enable innovation,
efficiency, quality, and customer
responsiveness, all of which can be
leveraged to create a cost advantage or a
differentiation advantage.

competitive advantages
Cost Advantage and Differentiation
Advantage
 Competitive advantage is created by using
resources and capabilities to achieve either a
lower cost structure or a differentiated product.
A firm positions itself in its industry through its
choice of low cost or differentiation. This
decision is a central component of the firm's
competitive strategy.
 Another important decision is how broad or
narrow a market segment to target.
competitive advantages
Value Creation
 The firm creates value by performing a series
of activities that Porter identified as the value
chain. In addition to the firm's own value-
creating activities, the firm operates in a value
system of vertical activities including those of
upstream suppliers and downstream channel
members.

competitive advantages
Conclusion
 To achieve a competitive advantage, the firm
must perform one or more value creating
activities in a way that creates more overall
value than do competitors. Superior value is
created through lower costs or superior
benefits to the consumer (differentiation).

competitive advantages
Feb 8, 2010 competitive advantages 20

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