STRATEGIC POSITIONING

FOR COMPETITIVE
ADVANTAGE
Presented by
RAYA ANWARI

Line of Course
This Chapter develop a
conceptual framework for
characterizing and analyzing
a firms strategic position
within an industry.

1. Defines the concept of

competitive advantage and
argues that to achieve it, a firm
must create more values than its
rival.

This Framework employs

simple economic concepts to
identify condition necessary
for competitive advantage in
a market.

2. Discuss the economic and

organizational logic of two broad
alternatives approaches to
positioning : cost leadership and
benefit leadership.

The chapter is organized in

three sections.

3. Explores broad coverage

versus focus strategies.

COMPETITIVE ADVANTAGE

Competitive Advantage : Framework

Definition : When a firm earns higher rate of economic profit than the average rate of economic profit of

other firms competing within the same market, the firm has a competitive advantage in that market.
A firms Profitability depends jointly on the economies of its market and its success creating more value

than its competitors.

What matters more for Profitability : the market or the Firm?
In fact, both market and positioning effects can explain profitability
Research by Anita Graham and Michael Porter suggest that the industry responsible for about 18% of the variation profit across

firms, while competitive position accounts for 32% of the variation in profit.

Framework for
Competitive Advantage

Market Economics

Benefit position
relative to competitors

Economic
EconomicProfitability
Profitability
Value created relative
to competitors

Cost Position relative

to competitors

Competitive advantage and Value

Creation : Conceptual Foundations
The purposes of doing
business is to create
customer ~ Peter Drucker
Business that are successful
in creating more value than
competitors will attain an
advantaged position relative
to competitors in the
marketplace. To illustrate why
we need to define value
creation and show how it
relates to competitive
advantage.

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