Foundations of Strategy Chapter 4.The nature and sources of competitive advantage Yetunde Oyinwola, Eric Carstens, Alex Kollaritsch, Laura Padilla, Taylor Mullings
Objectives • Understand the term “Competitive Advantage” • Predict potential for competition to wear away competitive advantage • Recognize how resource conditions create imperfections in the competitive process that offer opportunities for competitive advantage • Distinguish the two primary types: cost advantage and differentiation advantage • Use value chain framework to analyse potential sources of cost and differentiation advantage to recommend strategies for enhancing competitiveness • Appreciate the pitfalls of being ‘stuck in the middle’ and the challenge of achieving effective differentiation and low cost
Opening Case: Singapore Airlines • ‘World’s Best Airline’ by Conde Nast Traveler • Ranked 27th in Fortune Magazine’s ‘World’s Most Admired Companies’ 2010 • Based on two main strategies: its planes and its people • Planes o ‘Young’ fleets o First airline to launch Airbus A380 o Cost Advantage • People o Attracts first class university graduates o 110 hours of retraining for every employee annually o Focus on customer service o Differentiation Advantage Maintaining both is difficult!!
Emergence of Competitive Advantage How does competitive advantage emerge? External sources of change ● Changing customer demand ● Changing Prices ● Technological change Internal sources of change Resource heterogeneity among firms means differential impact Some firms faster and more effective in exploiting change Some firms have greater creative and innovative capability
C.A From Responsiveness to Change Involves one of two key capabilities: • The ability to anticipate changes in the external environment • Speed Markets have become turbulent and unpredictable, so speed of response through greater flexibility has become increasingly important Two requirements for quick response: • Information • Short cycle times
- Spring '15