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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?
21Sources 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
23First-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
24Late-mover advantage•There are also important late-moveradvantagesPicasso 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
25Networks 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.
26Networks 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
27Networks 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?