− Features: low prices, huge product variety, food court and childcare in the store− Bugs: No customization, single “style”, DIY, remote locations •Other examples from Porter: Jiffy Lube, Southwest
Sustainable CA through activities (4)•Forced tradeoffs generate straddling costs for rivals− Rivals with “better” product features in your “worse” dimensions can’t profitably match your “better” dimensions•Southwest / Continental Lite example− Can’t offer low fares and maintain FF benefits, agent fees− Can’t do frequent departures from hub cities•Other examples: online news vs print, Blockbuster vs. Netflix
Sustainable CA through activities (5)•Be an early mover− Acquire scarce assets (waterfront property)− Build out scale/scope (cable companies)− Learn new technologies (all manufacturing)− Develop sticky relationships with customers− Build a brand
Sustainable CA through activities (6)•Be a late mover− Avoid first movers’ cost of developing the market− Avoid their product design/manufacturing mistakes − Copy their success• Needs− Limited barriers to entry− (Currently) unconstrained supply of key assets •Some real examples − Apple: definitely not the first smartphone, tablet or PC− Zara: shamelessly and expeditiously copy popular styles
Sustainable CA through activities (7)•Porter and “Fit”− Activities mutually reinforce each other− Sounds kinda like complementarities, right?•“Core Competencies” (Prahalad & Hamel, 1990)− Focus on a few things your firm can excel in− Organize reporting/incentives around those capabilities instead of around product lines or customer types− Not quite complementarities, but focus on establishing activities and assets that are valuable and hard to replicate
Sustainable CA wrap-up•Sustainability = assets or activities rivals can’t or don’t want to replicate. These things must generate value•Your goal as a manager should be to understand logicof sustainability, not memorize mantras− i.e., focus is good, straddling is bad, be agile, be innovative, promote change •All of those business buzzwords have sensible logical foundations in certain circumstances•Try to identify that logic when those circumstances arise
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- Spring '17
- First-mover advantage, sustainable ca