Generic Business Level Strategy (SBU)

Competitive advantage
Generic business level strategy (SBU)

The objective is to build COMPETITIVE
ADVANTAGE PROFILE
Competitive Advantage
 Competitive advantage comes from
performing better than competitors
 Sustainable competitive advantage comes from
performing better than competitors for a long
time
Competitive advantage & core
competence
 A competitive advantage is a position of superiority on
the part of the firm in some function /factor/ activity/ in
relation to its competition. It is this superiority that
enables the firm to survive, grow and excel in a
competitive market.
 The superiority can be in any function such as
manufacturing, marketing, finance, HRM, or a
combination. Intellectual property, knowledge, or any
factor of production can give a competitive advantage.
 Thus competitive advantage is a superior position
relative to competition.
Com. Adv ( cont.)
 CA is linked to strategy. both goes hand in
hand. C A is a vital component of strategy.
 For the strategy to work the firm should have
competitive advantage.
 CA is the back up of strategy. without relevant
CA strategy will not succeed.
 Strategy can be used to create and excel CA.
Com. Adv.( con )
 Sources of CA :
 MARKETING
 FINANCE
 PRODUCTION
 R& D
 HR
 THE CEO & LEADERSHIP
 LOCATION & Many more.
“
“Successful business strategy is about actively shaping the
game you play, not just playing the game you find.”
(Brandenburger & Nalebuff)
“Investing aggressively in creating sustainable competitive

advantage is a company’s single most dependable contributer
to above-average profitability.” (Thompson & Strickland)
“The essence of strategy lies in creating tomorrow’s

competitive advantages faster than competitors
mimic the ones you possess today.” (Hamel &
Prahalad)
Strategy & Competitive Advantage

CA & Strength
 Strength is different from CA.
 All strength are not CA.
 All CA are strength.
 A strength is a CA only if it can affect the
competition in an advantageous manner or
bring in superiority in the market vis- a- vis
the competitor. Otherwise it will remain as
astrength.
Building CA
 By strategy
 By SWOT
 By bench marking- internal, functional, comptt,
generic
 By value chain approach,
 By analysing value chain of self and competitor
 Corporate clout confers comptt advtg on SBU
and SBU contribute to comptt advtg at
corporate level
 By adopting different strategic routes
Strategy & Competitive
Advantage
Competitive advantage is what allows a firm
to gain an edge over its rivals in attracting
customers and defending against
competitive forces.
Key challenges of competitive advantage:

1. build advantage
2. extend advantage
3. organise for advantage
4. sustain and renew advantage
Many routes to Competitive
Advantage
 NPD
 Quality
 Superior customer service
 Achieving lower costs
 Better geographic location
 Technical expertise
 Supply chain management
 Brand image / reputation
Generic Building Blocks of
Competitive Advantage
FIGURE 4.3
ANY COMPITIVE ADVANTAGE FINALLY MANIFESTS
AS EITHER
1 A COST ADVANTAGE, or
2 A DIFFERENTIATION ADVANTAGE
The Impact of Quality on Profits
FIGURE 4.4
Distinctive Competencies, Resources,
and Capabilities
The roots of competitive advantage:

FIGURE 4.7
Strategic Resources and
Capabilities
Intangible

Tangible

 Brand names
 Land
 Reputation
 Buildings
 Patents
 Plant
 Technological or
 Equipment
marketing know-
how
Distinctive Competencies
Skills in effectively coordinating and managing
resources for productive use.
 Unique resources and capabilities, or
 Common resources and
unique capabilities.
Strategy and Competitive
Advantage
The relationship between strategies and
resources and capabilities:
FIGURE 4.8
The Durability of Competitive
Advantage
 Barriers to imitation
 Speed of imitation by competitors in reducing advantage
 Imitation by acquiring similar resources
 Imitation of capabilities (more difficult)
 Limits on competitors
 Prior strategic commitments
 Absorptive capacity for change
 Industry dynamism
 The rapid innovation
shortens product life cycles.
Why Do Companies Fail?
 What went wrong? Avoiding failure and
 Inertia sustaining competitive
 Prior strategic advantage:
commitments  Focus on the building
 The Icarus paradox blocks of competitive
advantage.
 Institute continuous
improvement and
learning.
 Track best industrial
practice and use
benchmarking.
 Overcome inertia.

Generic Business Level Strategy (SBU)

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Competitive advantage

Generic business level strategy (SBU)

“Investing aggressively in creating sustainable competitive

“The essence of strategy lies in creating tomorrow’s

Strategy & Competitive Advantage

Key challenges of competitive advantage:

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