If perfectly mobile resources extract all the rents Eg Martha Stewart has

If perfectly mobile resources extract all the rents

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If perfectly mobile, resources extract all the rents E.g., Martha Stewart has exclusive deal with Home Depot to provide/endorse a line of paints, house products, etc. Consumers trust Martha’s judgment Rumored to drive $1B of sales annually Is this deal a source of sustainable competitive advantage for Home Depot?
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21 Sources of imperfect mobility Perfectly immobile: cannot be traded Firm’s reputation / tacit knowledge Somewhat specialized to firm Can be traded, but value inside larger than value outside Landing slots more valuable to hub airline CEO “fit” Complementarities between resources Harder to get all complementary assets to move together Team of top executives
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23 First-mover advantage Barriers to imitation suggest first mover advantage Getting a prime location Securing an exclusive gov’t contract Being the first to pay sunk costs in natural monopoly Moving down a learning curve Locking in consumers who have switching costs Building an installed base for your standard in a market with network externalities
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24 Late-mover advantage There are also important late-mover advantages Picasso had a saying. He said ‘Good artists copy, great artists steal.’ And we have always been shameless about stealing great ideas. – Steve Jobs First movers function as guinea pigs Build consumer awareness of a new technology Develop supply chains and distribution channels Convince customers to make complementary investments Whether it’s best to move first or move later must be determined on a case-by-case basis
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25 Networks of activities: Internal fit Porter article emphasizes the value of strategies that rest on many interlocking activities Ikea’s marketing concept: “young furniture buyers who want style at low cost” Ikea’s activities turn this into a strategic position: Large stores Long hours Child care Good cafe Contemporary design – Do-it-yourself No customization Activities not only don’t conflict, they reinforce one another.
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26 Networks of activities: Internal fit Complex networks of activities often difficult to imitate Causal ambiguity Have to imitate the entire system Contrast Ikea with upscale furniture store
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27 Networks of activities: Trade-offs Sustainable activity sets must not only have fit, they must also involve trade-offs “The essence of strategy is choosing what not to do” How many of you know someone who has “graduated from Ikea”? Should Ikea try to hold on to this customer?
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