COMPETITIVE ADVANTAGE
Unit-2
External Environment - Porter’s Five Forces Model-
Strategic Groups Competitive Changes
during Industry Evolution-Globalization and Industry
Structure - National Context and
Competitive advantage Resources- Capabilities and
competencies–core competencies-Low cost
and differentiation Generic Building Blocks of
Competitive Advantage- Distinctive
Competencies- Resources and Capabilities durability
of competitive Advantage- Avoiding failures and
sustaining competitive advantage-Case study.
Technical for external analysis
ETOP- Environmental threat and opportunity
profile
QUEST- Quit Environmental Scanning
Technique
SWOT- Strength Weakness Opportunities
Threats
PEST- Political Economic Social and
Technological factors
ETOP ANALYSIS
QUEST ANALYSIS
SWOT ANALYSIS
PEST ANALYSIS
Strategic groups
Strategic groups can be defined as a group
of companies within a particular industry
that follows a similar strategy or similar
business model. The companies that are
part of the same strategic group have more
competition with the members of the
strategic groups than the competitors
outside the strategic group.
INDUSTRY LIFE CYCLE
Industry life cycle
Industry life cycle
National context and
competitive advantage
Factors condition
BASIC FACTOR ENDOWMENTS
ADVANCED FACTOR
ENDOWMENTS
DEMAND CONDITIONS
REALTED AND SUPPORTING
INDUSTRIES
FIRM STRATEGY, STRUCTURE
AND RIVALRY
Resource, capabilities and
core competence
RESOURCE
CAPABILITIES
Core competences
Efficiency
The quantity of inputs it takes to produce a
given output
Productivity leads to greater efficiency and
lower costs
◦ Employee productivity
◦ Capital productivity
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Quality
Superior quality = customer perception of
greater value in a specific product’s
attributes
◦ Form, features, performance, durability, reliability,
style, design
Quality products = goods and services that
are reliable and that are differentiated by
attributes that customers perceive to have
higher value
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Innovation
The act of creating new products or
processes
◦ Product innovation
Creates products that customers perceive as more
valuable, increasing the company’s pricing options
◦ Process innovation
Creates value by lowering production costs
Perhaps the most important building block
of competitive advantage
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Responsiveness to Customers
Doing a better job than competitors of
identifying and satisfying customers’ needs
◦ Superior quality and innovation are integral to
superior responsiveness to customers
◦ Customizing goods and services to the unique
demands of individual customers or customer
groups
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The Durability of Competitive
Advantage
Barriers to Imitation
◦ Imitating Resources
◦ Imitating Capabilities
Capability of Competitors
◦ Strategic commitment
◦ Absorptive capacity
Industry Dynamism
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Avoiding Failure and Sustaining
Competitive Advantage
Focus on the building blocks of competitive
advantage
Institute continuous improvement in
learning
Track best industrial practice in use
benchmarking
Overcome inertia
Luck
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Thank you
