HT5 - Competitive Strategy

Question 1

Peteraf (1993)

Answer 1

Resource-based view: concerned with internal accumulation of assets, asset specificity and transaction costs
Assumption: resource bundles and capabilities underlying production are heterogenous across firms
Inferior resources exist – superior production factors with limited supply, e.g. monopoly rents
ex post limits to competition: forces that limit competition so that heterogeneity is sustained
ex ante limits to competition: prior to any firm’s establishing a superior resource position, there must be limited competition for that position

Question 2

Porter (1979)

Answer 2

essence of strategy formulation: coping with competition (customers, suppliers, potential entrants and substitute products are all competition)
Competition depends on 5 forces, the strongest ones determine the profitability of an industry
1. Threat of new entry: barriers to entry - economies of scale, strong existing differentiation, capital requirements, access to distribution channels, cost disadvantages, government policy
2+3. Power of suppliers & buyers: bargaining power? - concentration, uniqueness, importance, differentiation, costs
4. Threat of substitute products: powerful trends?
5. Rivalry among existing competitors: factors of intensity, like size, power, fixed costs, switching costs, exit barriers
Positioning company: Dr Pepper - avoided the largest-selling drink segments, maintained a narrow flavour line, developed a captive bottler network, marketing

Question 3

Prahalad & Hamel (1990)

Answer 3

The roots of competitiveness is competencies, which lead to core products and the development of business units
Competencies grow as they are applied and shared- top management’s real responsibilty
Core competence is communication, involvement, and a deep commitment to working across organisational boundaries – many levels of people and all functions
CC: provides access to several markets, dificult for competitors to replicate, makes significant contribution to end product/ customer benefits

Question 4

Wernerfelt (1984)

Answer 4

resource-based view (RBV) of firm
resources: assets tied semi-permanently to the firm, e.g. in-house knowledge of tech, skilled employees, trade contracts, machinery, capital, efficient procedures
attractive resources: directly or indirectly makes it more difficult for others to catch up, e.g. economies of scale, customer loyalty, experience, leads
building on core competencies, then entering markets that the firm has fully developed resources for
optimal growth involves the exploitation of existing resources and the development of new ones (m&a)

Question 5

Collis & Montgomery (1995)

Answer 5

RBV combines the internal analysis of firms with the external analysis of the industry
superior performance derives from a competitively distinct set of resources- relevant in the context of an industry only
reaching inimitability: physical uniqueness, path dependency, casual ambiguity, economic deterrence

Question 6

Teece et al (1997)

Answer 6

Focusing too much on positioning leads firms to underinvest into their core competencies