Competitive advantage Flashcards
In the 1980’s, Michael Porter produced what is now a
well-known set of criteria for sustainable competitive advantage, based on the three elements of what?
Cost
Differentiation
Focus
How can cost be used to achieve competitive advantage?
– using cost as a source of sustainable competitive advantage can be limited, most obviously by the fact there can be only one cost leader. Other firms with lower costs can still enjoy the benefits and generate above average returns. Companies should not assume that costs are related only to manufacturing, and in fact in many cases, the costs of marketing, selling and other service elements may outweigh production costs by some margin
Cost – in this approach, the firm sets out to become the cost leader in its sector. Note that ‘cost’ here does not refer to the selling price in the market, but to the cost of actually producing the product or service.
What is an example of a cost strategy decision?
Strategies such as banks outsourcing their call centres, and airlines forcing customers to do all their booking online
How can differentiation be used to achieve competitive advantage?
– in this approach, firms will seek to develop product / service attributes that are unique in their market and superior to those offered by the competition. As a result, they can command a premium price
How can focus be used to achieve competitive advantage?
– in a focus strategy, a company optimises its offering for a particular group of customers. In this way, it enjoys a comparative advantage that it would not enjoy if the market as a whole were considered. A focus strategy can be related to either of the above approaches, i.e. a cost focus or a differentiation focus, each being implemented for a narrow group of customers.
How do we achieve competitive advantage?
Understanding customers and what they value
Understand competitors
Configure the organisation to meet customer needs
What is meant by sustainable in terms of Competitive advantage?
Hard for your rivals to copy
Enable the lasting delivery of superior customer value
What are different ways to be different within the market?
Speed, reliability, service, design, features, relationship, personality, technology
How does Porter think brands can achieve competitive advantage?
cost leadership, differentiation, and focus (the generic strategies)
What are some advantages of strategic alliance?
Facilitate entry into new markets
Share fixed costs
Create added value for the customer
Brings together skills and assets that create competitive advantage together
What are some disadvantages of strategic alliances?
Conflict in management
Potential disagreement of joint objectives/goals.
What are Gantt charts useful for?
help teams to plan work around deadlines and properly allocate resources. Project planners also use Gantt charts to maintain a bird’s eye view of projects. They depict, among other things, the relationship between the start and end dates of tasks, milestones, and dependent tasks.
• The start date of the project
• What the project tasks are
• Who is working on each task
• When tasks start and finish
• How long each task will take
• How tasks group together, overlap and link with each other
• The finish date of the project
