Competitive Advantage: The nature and sources

Caitlin McPhersonVictoria SmithNick CapodagliDevin NewmanKevin LangfordCompetitive Advantage: The nature and sourcesObjectivesSingapore AirlinesThe Emergence of Competitive AdvantageSustaining Competitive AdvantageTypes of Competitive AdvantageCostDifferentiationStrategiesSummary/Closing Case (Starbucks)Relation to Boston Brew CompanySingapore AirlinesSingapore Airlines (SIA) enviable reputationStrategy based on 2 main pillars its planes and its people.Its planes: young fleetIts people: excellent training and experienceSIA tries to achieve both differentiation and cost saving through its approach to innovation

The Emergence of Competitive AdvantageBasic Definition: When two or more firms compete within the same market, one firm possesses a competitive advantage over its rivals when it earns (or has the potential to earn) a persistently higher rate of profit.BUT C.A. is not always revealed in high profitability

The Emergence of Competitive AdvantageExternal Sources of ChangeMust have differential effects on companiesResponsiveness to ChangeBased on the firms ability to respond to changeAnticipation and SpeedInnovation StrategiesCan overturn the competitive advantage of other firmsStrategic Innovation tends to involve pioneering along one or more dimensions of strategy:New industriesNew customer segmentsNew sources of competitive advantageSustaining Competitive AdvantageNew game strategiesSustaining competitive advantageImitationIsolating mechanismsImitationIdentificationIncentiveDiagnosisResource Acquisition

Sustaining Competitive AdvantageObscuring Superior PerformanceDeterrence and Pre-EmptionProliferationPatent ProliferationLarge InvestmentsDiagnosing Competitive AdvantageCasual AmbiguityUncertain Imitability First Mover Advantage

Sustaining Competitive AdvantageUrban Outfitters

Types of Competitive Advantage: Cost and DifferentiationStrategy and Cost AdvantageSeven Cost DriversEconomies of ScaleEconomies of LearningProduction TechniquesProduct DesignInput CostsCapacity UtilizationResidual EfficiencyPrincipal Stages of Value Chain Analysis for Cost AdvantageBreakdown the firm into separate activitiesEstablish the relative importance of different activities in the total cost of the productCompare costs by activityIdentify cost driversIdentify linkagesIdentify opportunities for reducing costsStrategy and Differentiation AdvantageOccurs when a firm is able to obtain from its differentiation a price premium in the market that exceeds the cost of providing differentiation.Differentiation is not solely about offering different products, it is about understanding every possible interaction between the firm and its customers.This requires looking at both the supply side and demand side of an organizationValue Chain AnalysisFour stages of a value chain analysis used to construct a differentiation advantage:1. Construct a value chain for the firm and customer2. Identify drivers of uniqueness in each activity3. Select the most promising differentiation variables for the firm4. Locate linkage between the value chain of the firm and that of the buyerSummarySimply put, making money in the business world requires establishing and sustaining competitive advantage.This depends on the existence of isolating mechanisms: barriers to rivals imitation of successful strategies.The characteristics of a firms resources and capability are fundamental to its strategy and performance.Closing Case: The rise and Fall of StarbucksWake up and Smell the CoffeeHoward Schultz (Founder, CEO)The fall of Starbucks (four bucks is dumb)Regaining momentumRemaining SustainableOur Company: Boston Brew Companyhttp://www.youtube.com/watch?v=3iqUDPQl9_A&feature=youtu.beOur Company: Boston Brew Company

Our Company: Boston Brew Company

Our Company: Boston Brew Company