Competitive_Positioning

Competitive_Positioning - BUSI698 Strategic Management...

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BUSI698 – Strategic Management Competitive Positioning
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Agenda for Today Levels of Strategy Business vs. Corporate Strategy What is Competitive Advantage? How do we measure it? Competitive Positioning Porter’s Generic Strategies How to measure positioning advantage Relative cost/WTP calculation
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Levels of Strategy Corporate Office Business A Business B Finance Production Marketing Finance Production Marketing Key Question : Which businesses should we be in? How should we enter? Key Question : How to achieve competitive advantage in individual businesses Key Question : Building resources and capabilities in each activity Corporate Strategy Business Strategy Functional Strategy
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Today: Business-Level Strategy Firm Economic Profits (Π29 Industry-Level Sources Firm-Level Sources Industry Structure Business Strategy: - Competitive Positioning - Resources & Capabilities Corporate Strategy Strategy Implementation
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Strategy: Quest for Profit Firm Profitabilit y Economic Average Industry Structure Firm-level choices
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What is Competitive Advantage? A firm has a competitive advantage when it is able to create more economic value than its rivals. Economic value created by a firm = Perceived benefits to customers who purchase product or service offering – full economic cost of product or service offering
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How do we measure competitive advantage? A firm with competitive advantage will have profitability above industry average Accounting measures of profitability: Return on Assets (ROA) = Net income/Total assets Return on Equity (ROE) = Net income /Total shareholders’ equity Return on Sales (ROS) (aka. Profit margin) = Net income / Total sales
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How are performance measures related? equity rs' shareholde Total assets Total * assets Total income Net ROE = equity s r' shareholde Total income Net ROE = ratio Leverage * ROA ROE = ratio Leverage * ratio over Asset turn * ROS ROE = equity rs' shareholde Total assets Total * assets Total sales Total * Sales Total Income Net ROE = Profitability Efficiency Capital structure
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More about Economic Value Value created: Perceived benefits to customers – economic cost of product or
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Competitive_Positioning - BUSI698 Strategic Management...

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