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Competitive Advantage
Katerina Zacharia
© Katerina Zacharia June 2007
Competitive AdvantageCreates a moat around a business such that
it can keep competitors at bay and reap extraordinary growth and profits
Whitney Tilson, 2000
The way an enterprise determines its positioning in the market in relation to its competitors
© Katerina Zacharia June 2007
Defining Process
1. Identify the company’s core competency Conduct SWOT Analysis What does the enterprise do best?
Ex. Operational excellence Ex. Customization Ex. Price and convenience
© Katerina Zacharia June 2007
Defining Process
2. Research competitive landscape Identify competitors
Conduct competitive analysis
© Katerina Zacharia June 2007
Competitive Analysis
Analyze key variablesProduct mixService offeringsPricingBrand: perception of qualityPackagingDistribution
© Katerina Zacharia June 2007
Defining Process
3. Determine the value proposition Clear statement of the tangible results a
customer gets from using your products or services
Perceived benefits to the customer
The more specific your value proposition is, the better
© Katerina Zacharia June 2007
Defining Process
Identify competitive advantageCan the firm provide a long-term
advantage that is not easily replicated?
© Katerina Zacharia June 2007
Key Point
Value proposition Defined from the customer’s
perspective
Competitive advantage Defined from the firm’s perspective
© Katerina Zacharia June 2007
Guess the value proposition?
© Katerina Zacharia June 2007
Value PropositionWalmart Price
Microsoft Ease of use, accessible
Dell Customization
Coca Cola Brand, taste
Apple Unique products, design, usability
McDonald’s Convenience, consistence
Mercedes Luxury, quality
Starbucks Customization, quality, consistency
© Katerina Zacharia June 2007
Define competitive advantage
© Katerina Zacharia June 2007
Competitive AdvantageWalmart Price/Convenience/Buyer Power
Microsoft Pervasive, Product Offering
Dell Price and Service
Coca Cola Distribution
Apple Product differentiation, innovation Market drivers
McDonald’s Operational Excellence (consistency)
Mercedes Quality
Starbucks Brand and service
© Katerina Zacharia June 2007
Classroom Activity
In groups of 4: List top five favorite music artistsDefine value propositionDetermine competitive advantage