Identify barriers to imitation (e.g. deterrence, preemption, causal ambiguity, resource immobility,barriers to resource replication) & base strategy upon them. Difficult to infl[r]
Trang 1The Nature and Sources of Competitive Advantage
The Nature and Sources of Competitive Advantage
• The emergence of competitive advantage
• Sustaining competitive advantage
• Competitive advantage in different market
settings
• Types of competitive advantage: cost and
differentiation
OUTLINE
Trang 2How does competitive advantage emerge?
External sources of
change e.g.:
•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
The Emergence of Competitive Advantage
Trang 3Competitive Advantage from
Internally-Generated Change: Strategic Innovation
Competitive Advantage from
Internally-Generated Change: Strategic Innovation
Characteristics of innovatory strategies:
– Associated with new entrants to an industry (e.g Nucor in steel, IKEA in furniture, Enron in energy, Home Depot in DIY, Dell in PCs)
– Reconcile conflicting performance goals (e.g Toyota’s lean production system combines low cost, high quality, and flexibility Richardson Sheffield in kitchen knives is low cost, innovative and customer responsive.)
– Reconfiguring the value chain
e.g. -• Nike’s system for manufacturing and distributing shoes totally
different from traditional shoe manufacturer
• Southwest Airlines simplification of the normal airline value chain
• Zara’s system of design, manufacture, and distribution
Trang 4REQUIREMENT FOR IMITATION
Identification - Obscure superior performance
- Deterrence signal aggressive
Incentives for imitation intentions to imitators
- Pre-emption exploit all available
investment opportunities
- Rely upon multiple sources of Diagnosis competitive advantage to create
“causal ambiguity”
- Base competitive advantage upon Resource acquisition resources and capabilities that are
immobile and difficult to replicate
ISOLATING MECHANISM
Sustaining Competitive Advantage Against Imitation Sustaining Competitive Advantage Against Imitation
Trang 5Competitive Advantage in Different
Market Settings
Competitive Advantage in Different
Market Settings
SOURCE OF IMPERFECTION
OF COMPETITION
COMPETITIVE ADVANTAGE
TRADING
MARKETS
•None (efficient markets)
•Imperfect information availability
•Transactions costs
•Systematic behavioral trends
•Overshooting
None Insider trading Cost minimization Superior diagnosis (e.g chart analysis) Contrarianism
PRODUCTION
MARKETS
•Barriers to imitation
•Barriers to innovation
Identify barriers to imitation (e.g deterrence, preemption, causal ambiguity, resource immobility,barriers to resource replication) & base strategy upon them.
Difficult to influence or exploit.
Trang 6TRADING
MARKETS
•None (efficient markets)
•Imperfect information availability
•Transactions costs
•Systematic behavioral trends
•Overshooting
None Insider trading Cost minimization Superior diagnosis (e.g chart analysis) Contrarianism
PRODUCTION
MARKETS
•Barriers to imitation
•Barriers to innovation
Identify barriers to imitation (e.g deterrence, preemption, causal ambiguity, resource immobility,barriers to resource replication) & base strategy upon them.
Difficult to influence or exploit.
MARKET
TYPE
SOURCE OF IMPERFECTION
OF COMPETITION
OPPORTUNITY FOR COMPETITIVE ADVANTAGE
Trading Markets and Production Markets Trading Markets and Production Markets
Trang 7Sources of Competitive Advantage
COST ADVANTAGE
COST ADVANTAGE
DIFFERENTIATION ADVANTAGE
DIFFERENTIATION ADVANTAGE
COMPETITIVE
ADVANTAGE
COMPETITIVE
ADVANTAGE
Sim ilar
pro duc
t
at l ow er c
ost
Price
from uniq
ue p