Creating Competitive

Advantage
Understanding the Demand Landscape
• Identify the customers basic needs while developing any product or
offering any service
• Understand how to influence the choice of your customers

Surveys Interviews One of the best

strategy to retain
the customers

• What are primary needs related to your Periodical

product or service
• What key differentiators are available
reviews
Choosing the Competitive Space

Understanding the Choosing the

Demand Landscape Competitive Space
Help in identifying the utility
attributes
Consumer
Perception Help in identifying the nearest
competitors

Help in identifying the space in

Vary from company’s Develop perceptual map
Perspectives perceptual map
gain insights into potential new
products
• Age
• Gender
• Qualifications
• Ethnicity
• income
Defining Competitive Advantage

people

• Companies are unique Outputs

Uniqueness of
product or service
processes

• If the product, or service, design meets customer’s requirements and

expectations, then properly designed transformational and delivery
processes will insure that the intended functional benefits of the
product and/or service are delivered.
Competitive Strategy

Competitive strategy is the process of developing competitive

advantage and earning above average returns for stakeholders.
Selecting a Competitive Strategy
How to Achieve Competitive Advantage
Competitive advantage is achieved through the
• strategic management of resources capabilities, and core
competences, as well as the firm’s responsiveness to opportunities
and threats in the external environment
 Resources and Competitive Advantage
Resources/Inputs

Tangible Intangible
Resources Resources

Raw Material firm reputation Premises technology human capital

All types of established distribution

Raw Material Machinery brand equity patents networks
Equipment's customer base

Finance trademarks

firm’s
capacity to transform
Capabilities
resources into competitive
products and processes.
Capabilities

• Capabilities are a more likely source of unique core competences that

create sustainable competitive advantages.

• How a firm nurtures and supports its capabilities so that they can
become core competencies is less visible to rivals, making efforts to
understand and imitate the firm’s capabilities more challenging.
• Competitive strategy mitigates opportunities and treats in the

external environment through preventive and reactive strategies.

• New opportunities are exploited in the wake of new competitive

positions that may be created in the process.

The Strategic Conduct of the Firm
The strategic conduct of the firm revolves around the
1. Performance objectives ,maximizing profits , increasing sales
2. Pricing policies, cost-plus, marginal cost, entry-deterring price
• (This creates an incentive for new firms to enter the market and attempt to capture some of these profits.
One way the incumbent can deter entry is to produce a higher quantity at a lower price than the
monopoly level, a strategy known as limit pricing)
• collusive pricing (Collusion is a non-competitive, secret and sometimes illegal agreement between rivals
which attempts to disrupt the market's equilibrium. The act of collusion involves people or companies
which would typically compete against one another, but who conspire to work together to gain an unfair
market advantage)
• price discrimination (Student discount, Cheaper prices by the time of the day)

What all these points reveal?

1. Social Expectations
2. Organizational
expectations
INFLUENCES ON COMPETITIVE STRATEGY
• Differences between the abilities
• Fundamental inequalities between most competitors
• Less efficient firms will be obliged to exit and the more efficient firms
will be subject to imitation
• Understanding and manipulating the factors that cause these
inequalities, so as to give the firm a sustainable competitive
advantage, largely govern long-term business success.
 Entry Barriers Rivalry Factors
• cost advantages reaped by companies when production • Industry growth
becomes efficient • Fixed (or storage}
• Exclusive product differences • Cost/value added
• Brand identity • Product differences
• Switching cow • Brand identity
• Capital requirements • Switching cost
• Access to distribution • Informational complexity
• necessary inputs/resources • Diversity of competitors
• Product design • Exiting the barriers
• Govt policies
• Expected retaliation

Buyer Power factors

• Bargaining leverage
Supplier power factors • buyer volume
• Differentiation of • Buyer switching cost relative to
inputs firm switching cost
• Switching the cost • Ability to backward integration
of supplier and • Substitute products
industry • Price sensitivity
• Supplier meditation • Brand identity
• Importance of • Buyer profit
volume to supplier • Decision makers incentives
• Impact of inputs on •
cost or
differentiation
Midterm-Project
 Project Components Marks

Title (product, service) 1

Introduction 2

Historical Background 2

Competitive advantage 4

Comparative industry (of relevant product or 4

service) analysis

Current position of the product or service 4

Group Coordination 1

Conclusion 2