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Competitive Advantage: The nature and sources

Competitive Advantage: The nature and sources. Caitlin McPherson Victoria Smith Nick Capodagli Devin Newman Kevin Langford. Objectives. Singapore Airlines The Emergence of Competitive Advantage Sustaining Competitive Advantage Types of Competitive Advantage Cost Differentiation

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Competitive Advantage: The nature and sources

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  1. Competitive Advantage: The nature and sources Caitlin McPherson Victoria Smith Nick Capodagli Devin Newman Kevin Langford

  2. Objectives • Singapore Airlines • The Emergence of Competitive Advantage • Sustaining Competitive Advantage • Types of Competitive Advantage • Cost • Differentiation • Strategies • Summary/Closing Case (Starbucks) • Relation to Boston Brew Company

  3. Singapore Airlines • Singapore Airlines (SIA)– enviable reputation • Strategy based on 2 main pillars– its planes and its people. • Its planes: “young” fleet • Its people: excellent training and experience • SIA tries to achieve both differentiation and cost saving through its approach to innovation

  4. The Emergence of Competitive Advantage • Basic Definition: “When two or more firms compete within the same market, one firm possesses a competitive advantage over its rivals when it earns (or has the potential to earn) a persistently higher rate of profit.” • BUT C.A. is not always revealed in high profitability

  5. The Emergence of Competitive Advantage • External Sources of Change • Must have differential effects on companies • Responsiveness to Change • Based on the firms’ ability to respond to change • Anticipation and Speed • Innovation Strategies • Can overturn the competitive advantage of other firms • Strategic Innovation– tends to involve pioneering along one or more dimensions of strategy: • New industries • New customer segments • New sources of competitive advantage

  6. Sustaining Competitive Advantage • New game strategies • Sustaining competitive advantage • Imitation • Isolating mechanisms • Imitation • Identification • Incentive • Diagnosis • Resource Acquisition

  7. Sustaining Competitive Advantage • Obscuring Superior Performance • Deterrence and Pre-Emption • Proliferation • Patent Proliferation • Large Investments • Diagnosing Competitive Advantage • Casual Ambiguity • Uncertain Imitability • First Mover Advantage

  8. Sustaining Competitive Advantage • Urban Outfitters

  9. Types of Competitive Advantage: Cost and Differentiation

  10. Strategy and Cost Advantage • Seven Cost Drivers • Economies of Scale • Economies of Learning • Production Techniques • Product Design • Input Costs • Capacity Utilization • Residual Efficiency

  11. Principal Stages of Value Chain Analysis for Cost Advantage • Breakdown the firm into separate activities • Establish the relative importance of different activities in the total cost of the product • Compare costs by activity • Identify cost drivers • Identify linkages • Identify opportunities for reducing costs

  12. Strategy and Differentiation Advantage • Occurs when a firm is able to obtain from its differentiation a price premium in the market that exceeds the cost of providing differentiation. • Differentiation is not solely about offering different products, it is about understanding every possible interaction between the firm and its customers. • This requires looking at both the supply side and demand side of an organization

  13. Value Chain Analysis • Four stages of a value chain analysis used to construct a differentiation advantage: • 1. Construct a value chain for the firm and customer • 2. Identify drivers of uniqueness in each activity • 3. Select the most promising differentiation variables for the firm • 4. Locate linkage between the value chain of the firm and that of the buyer

  14. Summary • Simply put, making money in the business world requires establishing and sustaining competitive advantage. • This depends on the existence of isolating mechanisms: barriers to rivals’ imitation of successful strategies. • The characteristics of a firm’s resources and capability are fundamental to its strategy and performance.

  15. Closing Case: The rise and Fall of Starbucks • Wake up and Smell the Coffee • Howard Schultz (Founder, CEO) • The fall of Starbucks (four bucks is dumb) • Regaining momentum • Remaining Sustainable

  16. Our Company: Boston Brew Company • http://www.youtube.com/watch?v=3iqUDPQl9_A&feature=youtu.be

  17. Our Company: Boston Brew Company

  18. Our Company: Boston Brew Company

  19. Our Company: Boston Brew Company

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