DQE

Competitive Advantage:
Is DQE the base of competitive advantage?

Prof. Spyros Lioukas, Dr Irini Voudouris Athens University of Economics and Business

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

Objectives:
DQE

Learners will

Understand the meaning of competitive advantage Understand what are the main types of competitive advantage Identify how competitive advantage may be created Recognize the basis of sustainable competitive advantage Distinguish the new bases of competitive advantage Identify how the DQE approach enhances the creation of sustainable competitive advantage
Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

What is Competitive advantage?

a basis for the firms long term success? a basis for value creation?

Do we really know where it resides? Can it be sustainable?

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

What is Competitive advantage?

When two or more firms compete within the same market, one firms possesses a competitive advantage over its rivals when it earns a persistently higher rate of profit (or has the potential to earn a persistently higher rate of profit)
R. M. Grant, 2000

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

The main types of Competitive Advantage

Cost advantage

Competitive advantage

Differentiation advantage

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

Competitive strategies by Porter

Types of competitive advantage
Low cost Differentiation

Industry-wide

Cost leadership

Differentiation

Market
Niche
Focus with low cost

Focus with differentiation

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

Competitive strategies extending Porter

Types of competitive advantage

Low cost Industry-wide

Market Cost Leadership

Differentiation
Differentiation

Hybrid Strategy Niche

Focus with low cost Focus with differentiation

In-between there might be a successful strategy (Value for Money)

Hybrid strategies can be more effective

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

Features of competitive strategies

DQE

Cost Leadership
Efficient scale Standardization Design for low production cost Control of overheads and R&D Avoid marginal customers

Differentiation
Quality Innovation Design Credibility Brand name Reputation Environmental posture Customer service Integrated services
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Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

Sustainable competitive advantage

What is meant by sustainable competitive advantage?

Durable Valuable to the firm
Exploiting weaknesses and neutralizing threats

Unique Difficult for competitors to imitate Not easily substitutable

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

DQE

May competitive advantage be sustainable?

Increased competition leads to decrease of differences in competitive advantage Standardization/ mass production of unique features: What can be left for differentiation?

Unique features of differentiation become prerequisites for survival

Dynamism & complexity of the environment
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How can competitive advantage be sustainable?

The firm must seek competitive advantage in combining resources & capabilities
Develop resources and capabilities, which are rare, valuable, non-tradable,

Make those resulting competences sustainable by precluding imitation or substitution by competitors

The firm must offer competitive products

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

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DQE

Sustainable competitive advantage based on capabilities

Innovation Reputation Architecture of relationships

DQE

J. Kay

Strategic assets

Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

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Competitive advantage map

DQE Quality Low cost Operational performance
Source: Competitiveness: Strategies of the best UK companies, Winning DTI-CBI

Prerequisites

Elements of differentiation Quality Low cost Oper. performance

Delivery time
Creditability

Delivery time
Creditability

Product Service
Design Marketing Customer service

Product Service
Design Marketing Customer service

Customized product
Reputation Innovative product

Customized product
Reputation Innovative product
Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds

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DQE

Sustainable competitive advantage reflected on product

Quality and quality of customer service Design Innovative product Customized product with integrated services Environmental friendly

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References

R.M. Grant, Contemporary Strategy Analysis, Blackwell Publishers, 2000. M.E. Porter, Competitive Advantage, New York: Free Press, 1985. J. Kay, Foundations of Corporate Success, Oxford University Press, 1995. G. Johnson, K. Scholes & R. Whittington, Exploring Corporate Strategy, Prentice Hall, 7th eds, 2005 C. Prahalad & G. Hamel, The core competences of the corporation, Harvard Business Review, vol. 28, n.3, may-june, 1990.
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References

S. Marthur, How firms compete? The Journal of General Management, vol.14, no 1, autumn 1988. F. Tilley, P. Hooper & L. Walley, Sustainability and competitiveness: Are there mutual advantages for SMEs?, in J. Oswald & F. Tilley, Competitive Advantage in SMEs: Organising for innovation and change, Wiley, 2003. K. Weigelt &C. Camerer, (1988), Reputation and Corporate Strategy: A review of recent theory and applications, Strategic Management Journal, 9
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