ACHIEVING AND

SUSTAINING
COMPETITIVE
ADVANTAGE

Presented by:
Amit Saxena
LakshikaNagpal
Rama Mittal
 COMPETITIVE
ADVANTAGE

Condition which enables a

company to operate in a more
efficient or otherwise higher-
quality manner than the
companies it competes with, and
which results in benefits accruing
to that company.
 
PORTER’S
CONTRIBUTION
FIVE COMPETITIVE FORCES
 COMPETITIVE FORCES
 The Entry of New Competitors
The threat of a new organization entering the industry is high when
it is easy for an organization to enter the industry i.e. entry
barriers are low.
Coca Cola is absolute marketing genius.
 The central Coca Cola factory produces concentrate. This is a thick
syrup which is diluted a zillion times to produce the drink.
 The syrup is shipped all over the world in barrels.
COMPETITIVE FORCES
 The Threat of Substitutes

The threat of substitute is high when:

• Price of that substitute product falls.
• It is easy for consumers to switch from one
substitute product to another.
• Buyers are willing to substitute.
 COMPETITIVE FORCES
 The Bargaining power of Buyer

Buyers or customers can exert influence and

control over an industry in certain
circumstances. This happens when:
• There is little differentiation over the product
and substitutes can be found easily.
• Customers are sensitive to price.
• Switching to another product is not costly.
 COMPETITIVE FORCES
 The Bargaining power of
Suppliers

Suppliers do have power. This power

comes from:
• If they are the only supplier or one
of few suppliers who supply that
particular raw material.
• If it costly for the organization to
move from one supplier to another
(known also as switching cost)
• If there is no other substitute for
their product.
 COMPETITIVE FORCES

o The Rivalry Among Existing Competitors

Generally competitive rivalry will be high if:
• There is little differentiation between the
products sold between customers.
• Competitors are approximately the same size
of each other.
• If the competitors all have similar strategies.
• It is costly to leave the industry hence they
fight to just stay in ( exit barriers)
VALUE CHAIN
 PRIMARY ACTIVITIES
The primary activities of the company include the
following:
 Inbound logistics
These are the activities concerned with receiving the
materials from suppliers, storing these externally
sourced materials, and handling them within the firm.
 Operations
These are the activities related to the production of
products and services. This area can be split into more
departments in certain companies. For example, the
operations in case of a hotel would include reception,
room service etc.
 PRIMARY ACTIVITIES
 Outbound logistics
These are all the activities concerned with distributing
the final product and/or service to the customers. For
example, in case of a hotel this activity would entail
the ways of bringing customers to the hotel.
 Marketing and sales
This functional area essentially analyses the needs and
wants of customers and is responsible for creating
awareness among the target audience of the company
about the firm’s products and services. Companies
make use of marketing communications tools like
advertising, sales promotion etc. to attract customers
to their products.
 PRIMARY ACTIVITIES
 Service
There is often a need to provide services like
pre-installation or after-sales service before
or after the sale of the product or service.
 SUPPORT ACTIVITIES
The support activities of a company include the
following:
 Procurement
This function is responsible for purchasing the
materials that are necessary for the company’s
operations. An efficient procurement
department should be able to obtain the highest
quality goods at the lowest prices.
 Human Resource Management
This is a function concerned with recruiting,
training, motivating and rewarding the
workforce of the company. Human resources are
increasingly becoming an important way of
attaining sustainable competitive advantage
 SUPPORT ACTIVITIES
 Technology Development
This is an area that is concerned with
technological innovation, training and
knowledge that is crucial for most companies
today in order to survive.
 Firm Infrastructure
This includes planning and control systems,
such as finance, accounting, and corporate
strategy etc.
ACHIEVING COMPETITIVE
ADVANTAGE
ACHIEVING COMPETITIVE
ADVANTAGE

 Cost
 Quality

 Innovation

 Service

 Convenience
COST ANALYSIS
COST ANALYSIS
The first step in cost analysis
is to determine a firm`s value
chain and to assign operating
costs to the appropriate value
chain activities.

When assigning costs to

various activities, it is
necessary to match costs
according to operational
reality.
 COST BEHAVIOR
Porter gave ten major cost drivers
Θ Economies of Scale
Θ Learning and spillovers
Θ Patterns of Capacity Utilization
Θ Linkages
Θ Inter-relationships
Θ Integration
Θ Timing
Θ Discretionary Policies
Θ Location
Θ Industrial factors
STEPS IN STRATEGIC COST ANALYSIS
 COMPETITIVE SCOPE IN THE
INTERNATIONAL ARENA

Porter Identifies FOUR dimension of scope that

effects competitive advantage:
1. Segment Scope

2. Vertical Scope

3. Geographic Scope

4. Industry Scope
PORTER’S DIAMOND –
DETERMINING FACTORS OF
NATIONAL ADVANTAGE
 The individual points on the diamond and the
diamond as a whole affect four intergradient
that lead to a national competitive
advantage.

These ingredients are :-

1. The availability of resources and skills

2. Information that firms use to decide which

opportunities to pursue with those resources
and skills
3. The goal of individual in companies

4. The pressure on companies to innovate and

invest
SUSTAINING THE
COMPETITIVE
ADVANTAGE
 Achieving competitive advantage is first step
& sustaining that is a further step.

 It is difficult to sustain a significant

competitive advantage over a time without
periodically revisiting the firm’s identity &
purpose.
CHARACTERISTICS OF
SUSTAINABLE COMPETITIVE
ADVANTAGE
 Create flexibility & adaptability so that
your products can change with the
customers

 Create consumer dependence on your

bundle of products
 Create flexibility and alternatives
in the sources and means of
production

 This is seen in Nissan’s production

structure. Examining Nissan’s
operations in Japan, and Mexico. We se
it operating system rely heavily on
robotics in Japan and mainly labor in
Mexico.
 Nissan gains the ability to shift production
based on factor costs while also maintaining
knowledge of different production system
SUSTAIN COMPETITIVE ADVANTAGE
■ Maintain system that monitor the
environment for change.
 Sustainable advantage depends on
how quickly firm can shift its focus
and respond to the
a. Management of change
b. Imperative of customer satisfaction
c. Maintenance of equilibrium between
domestic and global demands
 Develop Internal system that adapt to
change quickly & effectively

 This requires the development of an internal

reward structure that values new ideas and
rewards experimentation
 Work at protecting, expanding and
building upon the unique assets and
strengths of the company

 Maggie Noodles has gain a large market

share because of its unique Maggie
Masala, now celebrating its 25
successful years.
ACHIEVING & SUSTAINING
COMPETITIVE ADVANTAGE AT BAUSCH
& LOMB

When Bausch & Lomb marketed first

soft contact lens in 1971.
The company has retained its
dominance of the market through an
aggressive set of strategy…….
■ Allowing doctors to maintain a
supply of lenses in inventory
 Reducing the wholesale price by
28%
 Use TV advertising campaign
that achieved high brand
awareness among consumers
 Offering vision care
programmes designed to appeal
large optical chains
 Offering value discount

 Continuing to innovate with

new types of soft lenses