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Strategy & Competitive Advantage
Transcript of Strategy & Competitive Advantage
Create a definition Competitive Advantage Strategy Strategy is a coordinated and integrated set of where-to-play, how-to-win, core capability, and management system choices that uniquely meet a consumer's needs, thereby creating competitive advantage and superior value for a business. Strategy is: A diagnosis that defines or explains the nature of the challenge A guiding policy for dealing with the challenge A set of coherent actions that are designed to carry out the guiding policy 1 2 3 GOOD or BAD Look for Fluff & it uses "Sunday" words to create the illusion of high-level thinking
Fails to define the challenge
Mistakes goals for strategy
Statements of desire Defines a critical challenge
Builds a bridge between the challenge and action
It is about action, doing something
Deciding what is truly important and focusing resources and action on that objective
Strategy is design, and design is about fitting various pieces together so they work as a coherent whole How do you know if you have a ..... strategy ? Being strategic means... ... being less myopic than others, it is not the same as pretending you can see the future ... working with the facts on the ground, not the vague outlines of the future ... testing a scientific hypothesis, an educated prediction of how the world works ... as a strategy ... First, we need to understand
What is strategy? There are just two generic ways to provide customer value than your competitors in a sustainable basis Low-cost
Strategy There is only one low-cost player in any industry Loyalty = Match between what the brand distinctively offers and the consumer personally values "There simply is no one perfect strategy that will last for all time. There are multiple ways to win in almost any industry" What is COMPETITIVE
ADVANTAGE ? Homework check! A powerful and sustainable competitive advantage is unlikely to arise from one capability, but rather from a set of capabilities that both fit one another and actually reinforce one another P&G example P&G asked himself; What capabilities must P&G , as a global company, have to win across industries in which it would compete? Companies can be good at a lot of things, but not distinctively good at it to win. Does P&G needs to be distinctively good at manufacturing? You may be tempted to simply ask what are you really good at and build strategy from there Not all the elements need to be unique or impossible to replicate. It is the combination of capabilities, the activity system in its entirety, that must be inimitable Understand 1. The Industry
3. Relative position
4. Competition References Lafley, A.G. & Martin, Roger L. (2013) Playing to Win
Moore, Geoffrey A. (2002). Living on the fault line
Porter, Michael E. (1985) Competitive Advantage
Rumelt, Richard. (2011) Good Strategy, Bad Strategy Under price Reinvest Perceived to be
distinctively more value, same
cost-structure Competitive Advantage How do we become sustainable? It is a function of the demand of a given class of products and services relative to all other classes.
No business can outperform its category over time. Reflects the status and prospects of a specific vendor relative to its competitive set
(usually seen in market share) The advantage within the confines of a single market segment. A market segment is a set of customers who share a common and unique set of needs and reference each other when making the purchase decisions (WOM) The demand for a given product relative to its reference competitors References Which attributes and resources do i need? Value 4 Disciplines º Now from a holistic
point of view... Disruptive
Leadership How do we link these concepts?