Ch07

The Nature and Sources of Competitive Advantage ,[object Object],[object Object],[object Object],[object Object],OUTLINE

The Emergence of Competitive Advantage How does competitive advantage emerge? ,[object Object],[object Object],[object Object],[object Object],[object Object],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

Competitive Advantage from Internally-Generated Change: Strategic Innovation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Sustaining Competitive Advantage Against Imitation REQUIREMENT 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

Competitive Advantage in Different Industry Settings: Trading Markets and Production Markets TRADING MARKETS ,[object Object],[object Object],[object Object],[object Object],[object Object],None Insider trading Cost minimization Superior diagnosis (e.g. chart analysis) Contrarianism PRODUCTION MARKETS ,[object Object],[object Object],Identify potential barriers to imitation (e.g. deterrence, preemption, causal ambiguity, resource immobility, etc.) & base strategy upon them. Difficult to influence or exploit. MARKET TYPE SOURCE OF IMPERFECTION OF COMPETITION OPPORTUNITY FOR COMPETITIVE ADVANTAGE

Sources of Competitive Advantage COST ADVANTAGE DIFFERENTIATION ADVANTAGE COMPETITIVE ADVANTAGE Similar product at lower cost Price premium from unique product

Porter’s Generic Strategies SOURCE OF COMPETITIVE ADVANTAGE Low cost Differentiation Industry-wide COST DIFFERENTIATION COMPETITIVE LEADERSHIP SCOPE Single Segment F O C U S

Features of Cost Leadership and Differentiation Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Ch07

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Ch07

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