Quản trị kinh doanh - The nature and sources of competitive advantage

The Nature and Sources of Competitive AdvantageThe emergence of competitive advantageSustaining competitive advantageCompetitive advantage in different market settingsTypes of competitive advantage: cost and differentiationOUTLINEHow does competitive advantage emerge?External sources ofchange e.g.:Changing customer demandChanging pricesTechnological changeInternal sources of changeResource heterogeneity among firms means differential impactSome firms faster and more effective in exploiting changeSome firmshave greater creativeand innovativecapabilityThe Emergence of Competitive AdvantageCompetitive Advantage from Internally-Generated Change: Strategic InnovationCharacteristics of innovatory strategies:Associated with new entrants to an industry (e.g. Nucor in steel, IKEA in furniture, Enron in energy, Home Depot in DIY, Dell in PCs)Reconcile conflicting performance goals (e.g. Toyota’s lean production system combines low cost, high quality, and flexibility. Richardson Sheffield in kitchen knives is low cost, innovative and customer responsive.)Reconfiguring the value chain e.g.---Nike’s system for manufacturing and distributing shoes totally different from traditional shoe manufacturerSouthwest Airlines simplification of the normal airline value chainZara’s system of design, manufacture, and distributionREQUIREMENT FOR IMITATIONIdentification - Obscure superior performance - Deterrence--signal aggressiveIncentives 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 replicateISOLATING MECHANISMSustaining Competitive Advantage Against ImitationCompetitive Advantage in Different Market SettingsSOURCE OF IMPERFECTIONOF COMPETITIONMARKET TYPEOPPORTUNITY FORCOMPETITIVE ADVANTAGETRADING MARKETS None (efficient markets)Imperfect information availabilityTransactions costsSystematic behavioral trendsOvershootingNoneInsider tradingCost minimizationSuperior diagnosis(e.g.... chart analysis)ContrarianismPRODUCTION MARKETSBarriers to imitationBarriers to innovationIdentify barriers to imitation (e.g. deterrence, preemption, causal ambiguity, resource immobility,barriers to resource replication) & base strategy upon them.Difficult to influence or exploit.TRADING MARKETS None (efficient markets)Imperfect information availabilityTransactions costsSystematic behavioral trendsOvershootingNoneInsider tradingCost minimizationSuperior diagnosis(e.g.... chart analysis)ContrarianismPRODUCTION MARKETSBarriers to imitationBarriers to innovationIdentify barriers to imitation (e.g. deterrence, preemption, causal ambiguity, resource immobility,barriers to resource replication) & base strategy upon them.Difficult to influence or exploit.MARKET TYPESOURCE OF IMPERFECTIONOF COMPETITIONOPPORTUNITY FOR COMPETITIVE ADVANTAGECompetitive Advantage in Different Industry Settings: Trading Markets and Production MarketsSources of Competitive AdvantageCOST ADVANTAGEDIFFERENTIATIONADVANTAGECOMPETITIVEADVANTAGESimilar productat lower costPrice premiumfrom unique productPorter’s Generic Strategies SOURCE OF COMPETITIVE ADVANTAGE Low cost Differentiation Industry-wide COST DIFFERENTIATIONCOMPETITIVE LEADERSHIPSCOPE Single Segment F O C U S Features of Cost Leadership and Differentiation StrategiesGeneric strategy Key strategy elements Resource & organizational requirementsCOST Scale-efficient plants. Access to capital. ProcessLEADERSHIP 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.