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Competitive Advantage

Core Concepts

+ Value Chain

- Primary Activities: Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, Service

- Support Activities: Firm Infrastructure, Human Resource Management, Technology Development, Procurement

- Interrelationships between activities create value

+ Competitive Scope

- Segment Scope: Variety of products/services offered

- Vertical Scope: Extent of activities performed internally

- Geographic Scope: Regional, national, global

+ Generic Strategies

- Cost Leadership: Achieving lowest cost position in the industry

- Differentiation: Creating unique value for customers willing to pay a premium

- Focus: Concentrating on a narrow buyer segment or geographic market

Cost Leadership

+ Drivers of Cost Advantage

- Economies of Scale

- Learning Curve Effects

- Proprietary Technology

- Preferential Access to Inputs

+ Sustainability of Cost Advantage

- Barriers to Imitation: Patents, unique resources

- First-mover Advantage

- Continuous Improvement

+ Risks of Cost Leadership

- Technological Change

- Cost Imitation by Competitors

- Reduced Sensitivity to Customer Preferences

Differentiation

+ Bases of Differentiation

- Product Features

- Service Quality

- Brand Reputation

- Customer Service

+ Sustainability of Differentiation

- Barriers to Imitation: Brand loyalty, patents

- Customer Lock-in

- Continuous Innovation

+ Risks of Differentiation

- Cost Differential Too High

- Imitation by Competitors

- Changing Customer Preferences

Technology and Competitive Advantage

+ Technology as a Competitive Weapon

- Automation of Value Chain Activities

- Creation of New Products and Services

- Improved Information Flow and Coordination

+ Managing Technological Change

- Monitoring Technological Developments

- Investing in Research and Development

- Adapting Business Strategy

+ The role of information technology

- Data analytics for better decision-making

- Improved communication and collaboration

- Enhanced customer relationship management

Competitor Analysis

+ Identifying Competitors

- Direct Competitors

- Potential Entrants

- Substitute Products

+ Understanding Competitor Objectives

- Market Share Goals

- Profitability Targets

- Growth Aspirations

+ Assessing Competitor Capabilities

- Financial Resources

- Technological Expertise

- Marketing Skills

Industry Dynamics

+ Structural Analysis of Industries

- Threat of New Entrants

- Bargaining Power of Suppliers

- Bargaining Power of Buyers

- Threat of Substitute Products

- Rivalry Among Existing Competitors

+ Industry Evolution

- Emerging Industries

- Mature Industries

- Declining Industries

+ Strategic Choices in Different Industry Settings

- First-Mover Advantage

- Niche Strategy

- Exit Strategy

Summary insights

+ Competitive advantage stems from creating superior value for customers either through cost leadership or differentiation.

+ A thorough understanding of the value chain and industry structure is crucial for developing and sustaining competitive advantage.

+ Technology plays a critical role in enabling and enhancing both cost leadership and differentiation strategies.

+ Continuous monitoring of competitors and industry dynamics is essential for adapting and maintaining a competitive edge.

+ Successful implementation of a competitive strategy requires alignment of all organizational activities and resources.

React Flow

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