Post on 30-May-2018
transcript
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
1/22
BY,
ARULMOZHI.G (31509631007)
ASHOK KUMAR.S (31509631008)
Competitive Advantage &
Competency
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
2/22
Competitive Advantage
y Competitive advantage is the means by which a firm
manages to keep making money and sustain its position
against its competitors
y Competitive advantage occurs when a organization acquires
or develops an attribute or combination of attributes that
allows it to outperform its competitors
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
3/22
Once a new technology rolls over you, if youre
not part of the steam roller, youre part of the
road.
- Stewart Brand
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
4/22
Michael PortersModel
y Michael Porter proposed the theory in 1990 on competitive
advantage
y
The Five Forces diagram captures the main idea of Porterstheory of competitive advantage
y Basis: Industry structure and positioning within the industry
y The ultimate aim of competitive strategy is to cope with and,
ideally, to change those rules in the firm's behavior
y The five forces determine industry profitability
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
5/22
Porter's 5 Forces - Elements of Industry Structure
New Entrants
Buy er sSu ppliers
Su bstitute s
Ind ust ry
Competitors
Intensity
of Rivalry
Threat ofSubstitutes
Threat of
New E ntrants
Bargaining Power
of Suppliers
Bargaining Power
of Buyers
D eterm inantsof B uy er P ow er
B argaining L everage
Buyer concentration vs.
firm concentration
Buyer volume
Buyer switching costs
relative to firm
switching costs
Buyer information
Ability to backward
integrate
Substitute products
Pull-through
Price Sensitivity
Price/total purchases
Product differences
Brand identity
Impact on quality/
performance
Buyer profits
Decision makers
incentivesD eterm inantsof Su bstitution T hreat
Relative price performance of substitutes
Switching costs
Buyer propen sity to substitute
Rivalry D eterm inantsIndustry growth
Fixed (or storage) costs / value added
Intermittent overcapacity
Product differences
Brand identity
Switching costs
Concentration and balance
Informational complexity
Diversity of compe titors
Corporate stakes
Exit barriers
E n tr y B arriersEconomies of scale
Proprietary product differences
Brand identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
Proprietary learning curve
Access to necessary inputs
Proprietary low-cost product design
Government policy
Expected retaliation
D eterm inantsof Supplier Pow er
Differentiation of inputs
Switching costs of suppliers and firms in the industry
Presence of substitute inputs
Supplier concentration
Importance of volume to supplier
Cost relative to total purchases in the indu stry
Impact of inputs on cost or differentiation
Threat of forward integration relative to threat of
backward integration by firms in the industry
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
6/22
Creation of Competitive Advantage
y Innovation - perceiving or discovering new and better ways
to compete in an industry
y Innovations shift competitive advantage
y Significant advantages to early movers
y Typical causes of innovations that shift competitive
advantage
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
7/22
Implementation of Competitive Advantage
y Level of strategy implementation
y Conceiving new ways to conduct activities
Fit
Value chain
Activity mapping
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
8/22
Value Chain
y Systematic way of examining all the activities
y Differentiation and behavior of costs
y Scrutinizes each of the activities of the firm
y Potential source of advantage
y Firm fits into the overall value system of suppliers,
channels and buyers.
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
9/22
ActivityMapping
y Explains different strategies and positions can be
implemented
y
Positioning choices
y Essence of implementing strategy in activities
y Combining activities into a consistent fit
Variety-based positioning
Needs-based positioning
Access-based positioning
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
10/22
Porters Diamond- Determining Factors of
National Advantage
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
11/22
Strategic Intent
Business long-term, far-reaching goal
Accomplish in a 50 year timeframe
The main tenets of strategic intent planning are
Sense of Direction
Sense of Discovery
Sense of Destiny
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
12/22
Three Step Process
1. Set the Strategic Intent
2. Set the Challenges
3. Empowerment of the Strategic Intent
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
13/22
Porters Three Generic Strategies
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
14/22
Critical Success Factor
y Business term for an element which is necessary for an
organization or project to achieve its mission
Example: Staff orientation , Continuous improvement
Five key sources of CSF
The industry
Competitive strategy
Environmental factors Temporal factors
Managerial position
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
15/22
Critical Success FactorMethod
y Mission statement
y Develop 5-6 high level goals
y Develop hierarchy of goals and their success factors
y Lists of requirements, problems, and assumptions
y Leads to concrete requirements
y Analysis matrices
y Problems vs. Requirements matrixy Results of the Analysis
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
16/22
Benchmarking
y Process of identifying "best practice"
y Understand and evaluate the current position
y Identify areas and means of performance improvement.
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
17/22
Benchmarking
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
18/22
Benchmarking Process
1) Understand in detail existing business processes
2) Analyse the business processes of others
3) Compare own business performance with that of
others analysed
4) Implement the steps necessary to close the
performance gap
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
19/22
Types of Benchmarking
y Strategic Benchmarking
y Performance or Competitive Benchmarking
y Process Benchmarking
y Functional Benchmarking
y Internal Benchmarking
y External Benchmarking
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
20/22
The 7 S Framework
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
21/22
Conclusion
Sustainability of Competitive Advantage
Three conditions
Hierarchy of source (durability and imitability)
Number of distinct sources
Constant improvement and upgrading
8/9/2019 Competitive Advantage & Competency - Ashok Kumar and Arulmozhi
22/22