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 l-r. 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 becuase a combination of product offerings is difficult to copy.
Sources of CA - Structural - Installed Base - Microsoft Execution - Organizational Learning, Culture of Cust 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-inforcement - mutually re-inforcing 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 orgs 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
