Competitive Advantage
Sustainable Competitive Advantage is a set of assets, positions and environmental conditions that enable a company to consistently outperform its competitors in its chosen industry. It is NOT a strategy it the outcome of strategy.
Attributes - Cost Advantage - Unlikely MES > 75% and unlikely to be sustainable in the long-run. More likely a Hygiene Factor, unless you are the only one who lives on top of gold mine - Monopolies, Oligopolies Differentiation - Allows a firm to command a premium price because a combination of product offerings is difficult to copy.
- Sources of CA - Structural - Installed Base - Microsoft
- Execution - Organizational Learning, Culture of Customer Service
- Insight - Tech innovation (copyable) Pricing, Arbitrage
CA is about creating imperfections - Tech Innovation, Controlling Info, Barriers to entry/exit, High switching costs, Size (MES), Product Differentiation = PRICE MAKERS
It has to be perceived by the Customer
The sustainability of CA is based on
- Power
- Catching up - nullifying CA
- Keeping ahead
- Re-enforcement - mutually re-enforcing existing advantages
Is there more than one generic Strategy possible
- YES Org innovation, technology allows high quality/low cost.
- NO Stuck in the middle, most organizations are not flexible, different strategies need different and conflicting strategies
The three major routes to CA
- Specialize on a customer group - Focus
- Differentiation
- Lowest Cost Producer
Pharma - few and large - patented drugs
See also
