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Competitive Advantage: Is DQE the base of competitive advantage?. Prof. Spyros Lioukas, Dr Irini Voudouris Athens University of Economics and Business. Objectives: . Learners will Understand the meaning of competitive advantage Understand what are the main types of competitive advantage

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competitive advantage is dqe the base of competitive advantage

Competitive Advantage:Is DQE the base of competitive advantage?

Prof. Spyros Lioukas, Dr Irini Voudouris

Athens University of Economics and Business

objectives
Objectives:

Learners will

  • Understand the meaning of competitive advantage
  • Understand what are the main types of competitive advantage
  • Identify “how” competitive advantage may be created
  • Recognize the basis of sustainable competitive advantage
  • Distinguish the “new” bases of competitive advantage
  • Identify how the DQE approach enhances the creation of sustainable competitive advantage
what is competitive advantage
What is Competitive advantage?
    • … a basis for the firm’s long term success?
    • … a basis for value creation?
  • Do we really know where it resides?
  • Can it be sustainable?
what is competitive advantage4
What is Competitive advantage?

“When two or more firms compete within the same market, one firms possesses a competitive advantage over its rivals when it earns a persistently higher rate of profit (or has the potential to earn a persistently higher rate of profit)”

R. M. Grant, 2000

the main types of competitive advantage

Cost advantage

Similar product

at lower cost

Competitive

advantage

Higher price

for unique product

Differentiation advantage

The main types of Competitive Advantage
competitive strategies by porter
Competitive strategies by Porter

Types of competitive advantage

Low cost

Differentiation

Industry-wide

Differentiation

Cost leadership

Market

Niche

Focus with

low cost

Focus with

differentiation

competitive strategies extending porter
Competitive strategies extending Porter

Types of competitive advantage

Low cost

Differentiation

Industry-wide

Differentiation

Cost Leadership

Hybrid Strategy

Market

Niche”

Focus with differentiation

Focus with low cost

  • “In-between” there might be a successful strategy (Value for Money)
  • Hybrid strategies can be more effective
features of competitive strategies
Cost Leadership

Efficient scale

Standardization

Design for low production cost

Control of overheads and R&D

Avoid marginal customers

Differentiation

Quality

Innovation

Design

Credibility

Brand name

Reputation

Environmental posture

Customer service

Integrated services

Features of competitive strategies
sustainable competitive advantage
Sustainable competitive advantage
  • What is meant by sustainable competitive advantage?
    • Durable
    • Valuable to the firm
      • Exploiting weaknesses and neutralizing threats
    • Unique
    • Difficult for competitors to imitate
    • Not easily substitutable
may competitive advantage be sustainable
May competitive advantage be sustainable?
  • Increased competition leads to decrease of differences in competitive advantage
  • Standardization/ mass production of unique features: What can be left for differentiation?
  • Unique features of differentiation become prerequisites for survival
  • Dynamism & complexity of the environment
how can competitive advantage be sustainable
How can competitive advantage be sustainable?
  • The firm must seek competitive advantage in combining resources & capabilities
    • Develop resources and capabilities, which are rare, valuable, non-tradable,
    • Make those resulting competences sustainable by precluding imitation or substitution by competitors
  • The firm must offer competitive products
sustainable competitive advantage based on capabilities

Innovation

Reputation

DQE

Architecture of relationships

Strategic assets

Sustainable competitive advantage…based on capabilities

J. Kay’

competitive advantage map
Competitive advantage “map”

Source: “Competitiveness: Strategies of the best UK companies”, Winning DTI-CBI

Prerequisites

Elements of differentiation

Quality

Quality

Low cost

Low cost

Operational performance

Oper. performance

Delivery time

Delivery time

Creditability

Creditability

Product Service

Product Service

Design

Design

Marketing

Marketing

Customer service

Customer service

Customized product

Customized product

Reputation

Reputation

Innovative product

Innovative product

sustainable competitive advantage reflected on product
Sustainable competitive advantage …reflected on product
  • Quality and quality of customer service
  • Design
  • Innovative product
  • Customized product with integrated services
  • Environmental friendly
references
References
  • R.M. Grant, Contemporary Strategy Analysis, Blackwell Publishers, 2000.
  • M.E. Porter, Competitive Advantage, New York: Free Press, 1985.
  • J. Kay, Foundations of Corporate Success, Oxford University Press, 1995.
  • G. Johnson, K. Scholes & R. Whittington, Exploring Corporate Strategy, Prentice Hall, 7th eds, 2005
  • C. Prahalad & G. Hamel, “The core competences of the corporation”, Harvard Business Review, vol. 28, n.3, may-june, 1990.
references16
References
  • S. Marthur, “How firms compete?” The Journal of General Management, vol.14, no 1, autumn 1988.
  • F. Tilley, P. Hooper & L. Walley, “Sustainability and competitiveness: Are there mutual advantages for SMEs?”, in J. Oswald & F. Tilley, Competitive Advantage in SMEs: Organising for innovation and change, Wiley, 2003.
  • K. Weigelt &C. Camerer, (1988), “Reputation and Corporate Strategy: A review of recent theory and applications”, Strategic Management Journal, 9