Sustainable Competitive Advantage

Question 1

Two routes to sustainable competitive advantage

Answer 1

Cost leadership and product differentiation

Question 2

Success Case: Apple

Answer 2

Avoid price wars by emphasising unique value proposition, closed ecosystem encourages repeat purchase and eventual brand loyalty

Question 3

Success Case: McDonalds

Answer 3

Core positioning consistent worldwide and over time, menu adaptation to suit local preferences, maintain pace with changing consumer attitudes (vegan options)

Question 4

Failure Case: PS Vita

Answer 4

Doubtful positioning, lack of commitment from Sony, PS4 cannibalised sales, no solid communication of value proposition

Question 5

Failure Case: Mothercare

Answer 5

Too many other firms diversified into core business (John Lewis, Argos, Amazon), didn’t engage with online competition

Question 6

Competitive Advantage (Kay, 1993)

Answer 6

An advantage a firm has over competitors in a given market, strategic group or industry

Question 7

Early ideas (60/70s)

Answer 7

CA a complex phenomenon - assumption: firms with better leaders would make better choices and outperform competitors

Question 8

Porter (1980)

Answer 8

Outside-in: Key to strategy lies in industry dynamics and characteristics

Question 9

RBV (90s)

Answer 9

Inside-out: CA arises from internal organisation resources and capabilities
Industry structure often outcome of capabilities of its constituent firms - e.g. powerful brand outcome from years of successful NPD and marketing

Question 10

Modern Perspective (Cockburn et al, 2000)

Answer 10

The environmental and resource-based views on CA are complementary in explaining a firm’s performance

Question 11

Features of advantage creating resources

Answer 11

Contribute to providing value for customers
Uniqueness/scarcity
Imitability

Question 12

Cost leadership

Answer 12

Obtain a cost structure significantly below that of competitors while retaining products on the market that are in close proximity to competitor’s offerings

Question 13

Cost leadership suited to…

Answer 13

Commodity market where there’s little/no differentiation between products e.g. supermarkets, airlines

Question 14

Cost drivers (Porter, 1985)

Answer 14

Economies of scale, experience, integration, timing, location, institutional factors

Question 15

Differential Advantage

Answer 15

Involves the selection of one or more choice criteria that are used by customers in the market market. Firm the uniquely positions itself to meet this criteria

Question 16

Uniqueness drivers

Answer 16

Product differentiation, distribution differentiation, promotional differentiation, price differentiation, brand differentiation

Question 17

Product differentiation

Answer 17

Quality, designs and style, packaging, service

Question 18

Distribution differentiation

Answer 18

Different routes to market or different network/coverage of the market

Question 19

Promotional differentiation

Answer 19

Different promotions, different intensity, different content

Question 20

Price differentiation

Answer 20

Lower price when have the resources to fight a price war

Premium price as part of premium positioning strategy

Question 21

Brand differentiation

Answer 21

Establish a unique emotional proposition - consistency of message and association of a brand with ideas that are already held strongly in consumer’s mind