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PRESENTED TO: PROF. ANIL KUMAR
PRESENTED BY: CHANDRA KANT
(222006)
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Emergence of Competitive Advantage
When two or more firms compete within thesame market, one firm possesses a competitiveadvantage over its rivals when it earns (or has the
potential to earn) a persistently higher rate ofprofit.
BUT C.A. is not always revealed in high
profitability.
A firm may forego current profit in favour ofinvestment in market share, technology,
customer loyalty or dividends.
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External Sources of Change Must have differential effects on companies
Responsiveness to Change
Based on the firms ability to respond to change
Anticipation and Speed
Internal Sources of Change Innovation Strategies
Can overturn the competitive advantage of other firms
Strategic Innovationtends to involve pioneering alongone or more dimensions of strategy:
New industries
New customer segments
New sources of competitive advantage
Emergence of Competitive Advantage
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CREATING vs SUSTAINING
COMPETITIVE ADVANTAGE
The article separates the challenges of creatingcompetitive advantage at a point in time from theproblem of sustaining advantage over time.
The success of a business depends on its ability tosustain its competitive advantage over time.
Analyses of companies identified as outstandingperformers in their industries are sought tounderstand the sources of their competitive
advantage, to determine why the advantagesproved sustainable, and to assess their futuresecurity.
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Sustaining Competitive Advantage
Sustaining competitive advantage
Imitation
Isolating mechanisms
Imitation
Identification
Incentive
Diagnosis
Resource Acquisition
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Types of Competitive Advantage:
Cost and Differentiation
Competitive
Advantage
Cost
Advantage
DifferentiationAdvantage
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Porters Generic Strategies
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Cost Advantage
Cost advantage can be achieved by:
EXPERIENCE CURVE
COST DRIVERS VALUE CHAIN METHOD
CORPORATE RESTRUCTURING & BUSINESS
PROCESS REENGINEERING
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Principal Stages of Value Chain
Analysis for Cost Advantage
1. Breakdown the firm into separateactivities
2. Establish the relative importance of
different activities in the total cost of theproduct
3. Compare costs by activity
4. Identify cost drivers5. Identify linkages
6. Identify opportunities for reducing costs
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VALUE CHAIN
for an Internet Startup
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Value Chain Analysis for
Differentiation
Four 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
activity
3. Select the most promising differentiation
variables for the firm4. Locate linkage between the value chain ofthe firm and that of the buyer
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CONCLUSION
A successful firm does not simply participate inan attractive industry. It also positions itself tohave a competitive advantage within the industry.
C.A. derives from added value. A firm has addedvalue when the network of customers, suppliers,& complementors in which it operates is betteroff with the firm than without it, i.e. the firmoffers something that is unique & valuable in the
market place. A firm can use its analysis of activities to generate
& assess options for creating competitiveadvantage.
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THANK YOU
Remember:
Attaining competitive advantage is only half ofthe strategic struggle. Sustaining advantage in
the face of relentless rivals & turbulent change
is the other, more demanding half.