Competitive Advantage Flashcards
SWOT Analysis
Internal Analysis = Strengths + Weaknesses
External Analysis = Opportunities + Threats
Example of a cost advantage
Similar product at a lower cost
Example of a Differentiation Advantage
Price premium from a unique product
Cost leadership is…
Low-cost and industry-wide (Ryan Air)
Drivers of Cost Advantage
Economies of Scale
Economies of Learning
Production Techniques
Product Design
Input costs
Capacity Utilization
Residual Efficiency
What does the “Law of Experience” refer to?
The unit cost for a standard product declines by a constant proportion (20-30%) each time cumulative output doubles
Definition of Differentiation (Porter)
Providing something unique that is valuable to the buyer beyond simply offering a low price
Examples of Tangible Differentiation
Size, colour, materials, performance, packaging, complementary services
Examples of Intangible Differentiation
Image, status, identity and desire for exclusivity
What is Segmentation?
Process of dividing a company’s target market into groups of potential customers with similar needs and behaviours
Broad Scope Differentiation
Appealing to what is common between different customers
Focused Differentiation
Appealing to what distinguishes different customer groups
What is a simple organisational structure?
Owner/manager makes all major decisions and monitors activities
What is Functional Structure?
Divided management responsibilities by function (marketing, finance, HR, R&D
CEO is the only executive with an enterprise-wide perspective
What is the Multi-Divisional Structure?
Functions are replicated in each division - such as Geographic regions.
