Transcript: COMPETITIVE ADVANTAGE By: Aida Edora Akramin Jann Suhali SIMILAR PRODUCT Offering unique products and services and charging premium price for that. A company is in a competitive advantage when: COMPETITIVE ADVANTAGE cost leadership strategy Types of Competitive Advantages "Advantage" over competitors allowing companies to generate greater sales or margins and/or retain more customers than its competitors. LOWER COST CONCLUSION It has greater profitability and profit growth than competitors for the same set of customer Studies from different researchers support the association between the competitive advantage and firm performance in a positive way Recommend a productive opportunity for taking the advantage on other organizations Helps in further research for searching the methods of increasing the firm's performance COST ADVANTAGE PRICE PREMIUM superior performance; similar quality products or services but at lower costs DIFFERENTIATION ADVANTAGE THE 4 FACTORS DIFFERENTIATION ADVANTAGE Efficiency Quality Innovation Customer responsiveness Competitive Advantage COST ADVANTAGE UNIQUE PRODUCT
Transcript: Competitive Advantage: Alcohol Retailers We agreed on comparing 8 liquors 750mL bottles and 4 six packs of beers. Analysis Introduction Differentiation Group 1 “Soup 1” Topic: Competitive Advantage Members: Cory Ryan Catherine McDaniel Giuseppe Cagliostro Jonathan Cuevas Andrew Vasques Our Plan Cory - CVS & Ralphs Cathy - Target Giuseppe - BevMo Jonathan - Vons, Stater Bros, Liquor Store & Gas Station Andrew - Walmart & 7 Eleven Final Statistical Results Cost Leadership Making a product more attractive by contrasting its unique qualities with other competing products Liquors Smirnoff Ciroc Jack Daniels Jose Cuervo Patron Jäger Captain Morgan Barcardi Liquors Smirnoff - CVS, Target, and Walmart Ciroc - CVS and Walmart Jack Daniels - Ralphs Jose Cuervo - Vons Patron - CVS and Ralphs Jäger - CVS and Walmart Captain Morgan - CVS and Target Barcardi - CVS and Vons Beers Coors Light Henikien Shock Top Modelo Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. Overall CVS and Walmart have the lowest prices. An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. We decided to look at prices of various types of alcohol and compare the competitive advantage of the different types of retailers. On Monday, July 7 we individually went to various stores and communicated with each other through group text messaging. We analyzed the price, convenience, and display in the stores. We Shared and collaborated all of our pictures and results on Google Drive. Selected Retailers Competitive Advantage Lowest cost of operation in the industry. We recorded the lowest prices. 10 Different Retailers were selected Vons, Ralphs and Bevmo seemed to have the rarest kinds of beers and liquors Bevmo has the most product differetiation because of their large selection and the way the store is advertised by alcohol Selected Alcohol Beers Coors Light - CVS, Walmart and Bevmo Henikien - Walmart Shock Top - BevMo Modelo - Stato Bros Target, Walmart and CVS carry all kind of other items in their stores. CVS is a unique pharmacy for carrying more expensive alcohol like wine and hard liquor 7 Eleven and Cheveron Gas Station only sell beer. It seems that most stores utilize some sort of cost leadership, segmentation or differentiation to gain some form of market share. The strategy that is chosen seems to depend on a variety of things like company's goals, mission, and different forms of utility. Demographics are a large factor in determining market segmentation. Cost leadership seems to be more orientated with a companies goals and mission. While differentiation is mostly used by other stores like Stater Bros or Von's to distinguish themselves from others. Segmentation
Transcript: Hotel B ENZ, C.A. AND HARRISON, J.S., 2010. Hospitality strategic managmeement; concepts and cases. 2nd ed. New Jersey, USA: John Wiley and Sons Inc. DOGAN ET AL, 2013. Architectural Innovations are Competitive Advantage for Hotels in Tourism Industry?: What Customers, Managers and Employees Think about it? Procedia – Social and Behavioural Sciences, 99, pp.701-710. HARMON, P., 2014. Business Process Change: Abusiness process management guide for managers and process professionals. 3rd ed. Waltham, MA: Elsevier Inc. HOTEL B, 2014. Hotel B Visit. [interview]. 16 April 2014 HOTEL A, 2014. Hotel A Visit. [interview]. 10 March 2014. LIANG, B.C., 2013. The pragmatic MBA for scientific and technical executives. Waltham, MA: Elseiver Inc. PORTER, M.E., 1980. Strategic Management. New York, NY: The Free Press. TAYLOR, E.C., 2012. Competitive improvement planning: Using Ansoff’s matrix with Abell’s model to inform the strategic management process. Allied Academies International Conference: Proceedings of the Academy of Strategic Management (ASM), 11(1), pp. 21-27. COMPETITIVE ADVANTAGE Positioning Strategy - the way they are carried out affect how the company is perceived - also affect company's performance; competitive advantage Meal Experience Accommodation Hotel A Thank you for your attention! Hotel A Good Afternoon! PESTEL Hotel A SWOT Business Portfolio Competitors Strategic Direction - investment has to be strategically planned - company has to know its goals and objectives Pricing (Enz and Harrison 2010) and (Dogan 2013) Porter's 3 Generic Strategies by: Reka Fasi Sustaining CA Hotel B Porter's Five Forces - higher profits, bigger market share - to rise above the competition - to create advantages by developing different unique capabilities in order to stand out - first achieving then sustaining! - constant market research - Hotel A and B - Competitive Advantage - Operational Tactics - Current Trends Achieving CA Trends Bibliography Operational Tactics Competitive Advantage Hotel B
Transcript: Internal - Strengths/weaknesses External Macro - Sociocultural External Macro Threats Company overview and history External Macroeconomic Environement Net-Neutrality FCC’s 2010 ruling Internet discrimination among wireless providers Foreign Markets Tax laws and foreign policy Piracy laws Protection of confidential consumer data Netflix is the world’s leading Internet television network Founders: Reed Hastings and Marc Randolph In 1999, the company generate the first subscription program In 2007, Netflix began to offer streaming on demand for viewing from a PC In 2011, Netflix charged separately for the DVD rentals and the streaming content. External Macro - Political/Legal Substitutes: moderate threat - Redbox kiosks: rental fee is switching cost - Torrenting: no switching costs - No price pressure on the industry Buyer Power: moderate threat/opportunity - Undifferentiated products but differentiated viewing styles - don’t buy in large volumes - no backward integration threat Domestic streaming International streaming Domestic DVD Global Expansion: Canada - Population ~11 million households have access to internet - Potential market size of 10 million subscribers - By acquiring 30-40%, 5 million new subscribers Latin America - Penetrating 5% will lead to more than 8 million subscribers Asia - Fast broadband speeds Profit: $53 million Profit margin: 4.18% ROE: 12.72% ROI: 5.08% Competitive Advantage Delinearization of the Television Model Cord-Cutting Second Screening, Mobile Applications, and Online Streaming Over 80% of smartphone and tablet owners report using their devices while watching television 97% of media content streaming is done through the use of mobile applications Rapid growth within the smartphone, tablet, and broadband internet industries Age Demographics 71% of consumers between ages 18 and 34 used a subscription video account External Macro - Economic Cord-Cutting Effective content acquisition and convenience 900,000 households have “cut the cord” or started a household without a pay-TV subscription Binge watching Second Screening Over 80% of mobile device owners use the devices while watching TV 97% of content streaming is accounted for by mobile devices (59% from smartphones alone) Demographic factors: Foreign language usage and age groups Nearly 61% of US population speaks a language other than English Primarily Spanish Individuals age 18-34 constitute the majority of online streaming Strategic Recommendations External - industry opp/threat External - industry opp/threat Generic Competency Recession Positive and negative aspects Netflix has experienced positive consequences Greater value given a limited budget Cell phone usage and increased ubiquity Differentiation through mobile devices Online streaming Media consumption and increased convenience Internet Access Low capabilities of developing countries Over-saturation of developed markets Threat of Entry: Moderately high barriers due to - economies of scale - product differentiation - lack of switching cost Supplier Power: - highly differentiated supplies - high amount of substitutes - can threaten to forward integrate Latin America Significant potential growth driver 150 million households A growing middle class, current lack of pay-TV options, and expected improvement in payment systems Broadband speeds and penetration are expected to increase Southeast Asia, Japan, and India Competitors - not numerous and not equal in size or power - Netflix accounts for 32.3% of downstream traffic - Hulu accounts for 2.41% - Amazon has large consumer base - low to none switching cost Segment performance Current performance To increase the subscriptions domestically and internationally To become the best global entertainment distribution services To improve customer’s experience External - industry opp/threat Net-Neutrality Pending litigation involving Internet Service Providers Wireless providers remain free to discriminate in providing internet access Tiered pricing and higher costs Anti-competition practices Expanded into Canada in 2010 Population of 35 million with over 13 million households of which 83% have internet access Target market of over 10 million subscribers Average broadband speed of 6.7 Mbps Europe - U.K., Ireland, Sweden, Norway, Finland, and Denmark U.K.’s population is 63 million with 26 million households Nordic countries when grouped with Ireland have a combined population of 30 million with an estimated 12 million households Highly developed with more than adequate broadband speeds If penetration in these markets is comparable to domestic success, Netflix stands to gain 5 million and 12 million subscribers from Canada and its current European markets, respectively Services Netflix’s objectives External Macro - Technological
Transcript: Suppliers Chinese and Italian suppliers Brand equity Product classification: Long term competitive advantage Competitive Advantage Strategy Suggestions Narrow customer segment Great designs Industry involvement: Over industry average “Handbag makers Hermes now owns an alligator farm in Louisiana and two crocodile farms in Australia” THERE ARE NO SUBSTITUTES Performance implications Operations Competitive impact Yes – but is the designer better than other fashion house’s designer ? Sustainable since the designer cannot be substituted Durability – yes, as long as the designer is able to work Yes Location of the store – Customer loyalty Implementation External and internal environment Inbond Logistics: Famous Designer Rare? Organized? Organized? Yes Fashion Shows with media coverage Potentiel Entrants Famous Designer Brand Expensive industry to succeed in Competitive disadvantage No Base resource that gives minor advantage (Fashion designer is part of the infrastructure) Designer is supported by a business manager The Resource-Based View (RBV) Service Yes AGENDA: Suppliers Breakthrough Resources WEAKNESSES Brand reputation vs. chief fashion designer Offering high customer perceived value (CPV) and strong brand associations - Brand & Fashion Shows Thanks! Prêt-a-porter SW-Analysis - - Substantial shift in emphasis away from environment-based views (Porter). Implementation Yes STRENGTHS Valuable? Suppliers: Sustainable Competitive Advantage? Yes Competitive advantage ? Main sources of Competitive Advantage in the Value Chain Over industry average DESIGNER Competitive advantage in the fashion industry Yes Testing elements of value chain => Competitive adv. Sence of business BRAND Brand & Fashion Shows Under industry average "Our concern is ensuring continuity in the quality of the products we use and being able to trace them," Porter’s 5 Forces Introduction of the case LOW DIFFERENTIATED PRODUCTS A large network Additional service to prêt-à-porter clients at retail outlets Minor – many suppliers, no exclusive rights to fine materials Competitive impact Dilution risk Backward integration Core competencies: Producing and designing fashionable clothes of known fashion designers HIGH Fashion house structure - Rare? SERVICE Designer B2C - Outbond Logistics: Brand equity – Create brand awareness - Goal: Increase/Maintain customer perceived value (CPV) and develop customer loyalty - Competitive disadvantage Design and manufacture of each haute couture dress by a famous designer Question 1: Do you agree with the above comments and conclusions on the competitive adv. of luxury goods companies? What are the competitive adv. of such companies? Strategy VRIO Test Marketing & Sales Short term competitive advantage Yes Rare? Operations: Hierarchy of Resources Yes “LVMH's deal last month to pay 2 billion euros ($2.7 billion) for 80 percent of Italy's Loro Piana, one of the world's top cashmere makers” Inimitable? VERY HIGH Yes Base Resources No Introduction of the case: Luxury goods companies Inimitable? Inimitable? The VRIO TEST - Location is crucial Introduction of the case: HIGH SERVICE Over industry average Yes Magazine agreements VRIO Framework High Anne-Sofie Knudsen Maria Ruela Simões Martin Grøn Miguel Nogueira Rodrigues Nicoline Kirk Rita Simões Monteiro Question 2: Can the competitive adv. be reclassified using the resource-based concepts developed by strategists like Hamel and Prahalad and Kay? Control of stores – Secure concepts Yes National and International markets Outbond logistics Organized? Yes PRODUCT DIFFERENTIATION Strategy SWOT Core Resources Marketing & Sales: Service level – Customized service VRIO Framework dye, spin and weave the fabrics Buyers Valuable? No The RBV- Seek own solutions within own context => Silk + individual resources Competitive Advantage at Louis Vuitton and Gucci Over industry average Valuable? Gross profit margins: >50% Affordable luxuries Suppliers Variety of brands Low Int. environment Yes – Strong brand gives them an advantage Yes – Fashion shows gives them an advantage (generate more sales, valuable advertising) Services - Yes Respectable brand Definition: Individual resources => Competitive advantage + Value-added. A good reputation of quality Long term competitive advantage Fashion house structure Exclusive and discreet levels of service Short term competitive advantage Annual sales: >$165 billion Strategy: Differentiation (industry) and Focused Differentiation (brand) LOW HIGH Overview: CATÓLICA LISBON SCHOOL OF BUSINESS & ECONOMICS No DESIGNER Service: Industry Competition Industry average - Key activity: Preparation and display of new collection for its bi-annual fashion show Case introduction Market: Leader: LVMH ($12 billion), Richemont ($3,6 billion) and Gucci Group ($2,4 billion) Buyers Competitive Advantage: Ext. environment No Competitive parity Performance implications Question 3: Suggestions to companies outside the fashion industry from the strategies used in this
Transcript: 10 Companies with Sustainable Competitive Advantage for Long term Investment 1. Apple 2. Samsung 3. Coca- Cola 4. Colgate Palmolive 5. Procter & Gamble 6. IBM 7. Exxon Mobile 8. Johnson & Johnson 9. Abbot Laboratories 10. Lockhead Martin WHY? Evidence for sustainable advantage requires a company that has: 1. Been around for a long time 2. Outperformed the average company consistently 3. Not changed a lot over time Let's talk about Distinctive Competencies... The firm's resources and capabilities come together to form the company's distinctive competencies. Resources- firm specific assets e.g. patents and trademarks, proprietary know-how, brand equity etc., Capabilities- firm's ability to use it's resources with effect and efficiency. Not always easy to identify or explain as they should be embedded into the routine of the organization- this makes them difficult to be stolen or copied. It all comes full circle; Cost This is the center of the company's COMPETITIVE STRATEGY. DIY allows lower pricing Cost advantage is a firm's ability to produce a good or service at a lower cost than it's competitors. They then have the ability to sell at a lower cost and generate margin on sales. The Edge... Technology Service Expertise Innovation Specialization ? Common means to Differentiation: Competitive Advantage What Defines Competitive Advantage? IKEA Focus Porter's Generic Strategies What are some of the ways these companies have differentiated themselves? In turn... How do you determine what strategy to use? Michael E. Porter's Competitive Advantage Porter identified two basic types of competitive advantage; basic fast food at low prices division of labor hire & train inexperienced employees Focus Strategy Cost Leadership Differentiation Many ways to use strategy, but Strategy is the creation of a unique and valuable position, involving a different set of activities. If there were only one ideal position, there would be no need for strategy (Porter, 2000). By clearly choosing to compete in one way and not another, senior management makes organizational priorities clear (2000). Are these two strategies exclusive from each other? Southwest "An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. There can be many types of competitive advantages including the firm's cost structure, product offerings, distribution network and customer support". - Investopedia Low cost or Differentiation Resources and capabilities come together to create lower cost structure or differentiated product which is the core of a competitive advantage. Low cost, industry-wide Consistent lower prices than competitors large, efficient supply chain strong buyer power Think of examples in which a company has used the cost leadership strategy. How did they achieve this? Differentiation Strategy What are some of the methods these companies used to gain a competitive advantage? Summary: McDonald's Competitive advantage gives a company an edge over it's rivals... Differentiation Advantage Efficiency minimized wait times same planes etc. Is there a specific factor that separates cost leadership from differentiation? Cost Advantage Darrell Haley and Marcelina Slota A differential advantage exists when a firm's product or service is seen as being better than the competition. Walmart
Transcript: #1: Foreclosing input/output market to competition. #2: Cross- subsidization of one stage of the value chain by another, to squeeze out more focused competitors. #3: Increase entry barriers for new entrants. #4: Retaining control over proprietary knowledge to prevent customers or suppliers from competing. #5: Cost reduction. #1: Defenders face difficult choices #2: Leaders in one generation of technology are seldom leaders in the next. #3: Attackers enjoy important advantages. #4: Management should be alert to the next curve. Acquire or develop? - Financial - Effects of scale - Growth opportunities - Vertical integration - Merge & acquire What should a company, currently on top of the S-curve do to remain #1? The S-curve and its strategic lesson Four lessons Vertical integration is dead, or is it? Disadvantages The acquired? Mergers & Acquisitions Hence: Lesson #4: Management should be alert to the next curve. - Get closer to the customer to learn from them. Outdated > Switch to outsourcing Advantages Conclusion Traditional arguments Competitive advantage Acquire 1. Speed of market entry 2. Cost reduction 3. Risk reduction 4. Financing and deal structure. 5. Developing new resources/capabilities 6. profit from undervalued companies New: Learning motives - No considerations for current management - Domination, no mutual growth by Ruven Widmer, Marco Dubacher and Sophie Janson
Transcript: COMPETITIVE ADVANTAGE Execution Maximizer Excellence, not average, is your measure. Taking something from below average to slightly above average takes a great deal of effort and in your opinion is not very rewarding. Transforming something strong into something superb takes just as much effort but is much more thrilling. Strengths, whether yours or someone else’s, fascinate you. Like a diver after pearls, you search them out, watching for the telltale signs of a strength. A glimpse of untutored excellence, rapid learning, a skill mastered without recourse to steps—all these are clues that a strength may be in play. And having found a strength, you feel compelled to nurture it, refine it, and stretch it toward excellence. You polish the pearl until it shines. This natural sorting of strengths means that others see you as discriminating. You choose to spend time with people who appreciate your particular strengths. Likewise, you are attracted to others who seem to have found and cultivated their own strengths. You tend to avoid those who want to fix you and make you well rounded. You don’t want to spend your life bemoaning what you lack. Rather, you want to capitalize on the gifts with which you are blessed. It’s more fun. It’s more productive. And, counterintuitively, it is more demanding. What can you Do? 2 Futuristic LM 3 Focus Interesting Article own 15 30% 50% We 1 Restorative If you said Hamburgers at all, let's go Deeper 1 Focus EM or 5 Input Naturalists EM of TA FUTURING SERVICE Master Franchises USA listening, and transforming Dreams into reality Early Adopters QA/QC 2 Maximizer Some out of the Box L 2% Architect Who? Marketing is not synonomous with Sales McDonald Designs and executes the Entire Customer Experience EM Target Market 1 Adaptability 1 Futuristic Me Innovating EA McDonalds 4 Achiver Talent SELF ASSESSMENT karen Business Accounting 3 Positivity Challenge Restrictions What is the VP? All Maximizers Early Adopter [EA] TOIN Group Harry Beckwith Innovating.Executing.Connecting Innovated.Executed.Connected Innovation.Execution.Connection Laggards [L] Talent Agents Difference Transforming Architecture Start a Master Franchise in the U.K. Achiever Your Achiever theme helps explain your drive. Achiever describes a constant need for achievement. You feel as if every day starts at zero. By the end of the day you must achieve something tangible in order to feel good about yourself. And by “every day” you mean every single day—workdays, weekends, vacations. No matter how much you may feel you deserve a day of rest, if the day passes without some form of achievement, no matter how small, you will feel dissatisfied. You have an internal fire burning inside you. It pushes you to do more, to achieve more. After each accomplishment is reached, the fire dwindles for a moment, but very soon it rekindles itself, forcing you toward the next accomplishment. Your relentless need for achievement might not be logical. It might not even be focused. But it will always be with you. As an Achiever you must learn to live with this whisper of discontent. It does have its benefits. It brings you the energy you need to work long hours without burning out. It is the jolt you can always count on to get you started on new tasks, new challenges. It is the power supply that causes you to set the pace and define the levels of productivity for your work group. It is the theme that keeps you moving. BOYD Who? Control Questioning Paying Fees and Royalties Win Win with Franchisor to Grow the System 5-8% Are you Achieving your Dream for your Architecture? Courting Rebel EM Innovating.Executing.Connecting Innovated.Executed.Connected Innovation.Execution.Connection What Do They Do? Doer Theme INTELLECTUAL PROPERTY Accounting Connecting 4 Strategic Secret to Great Teams is casting Individual Strenths Agencies 3 Learner 10% Internal Fire that Dwindles and Rekindles Itself 1 Ideation Who? 2 Ideation Futuring Rangers 1 Restorative EM 2 Activativor Learner You love to learn. The subject matter that interests you most will be determined by your other themes and experiences, but whatever the subject, you will always be drawn to the process of learning. The process, more than the content or the result, is especially exciting for you. You are energized by the steady and deliberate journey from ignorance to competence. The thrill of the first few facts, the early efforts to recite or practice what you have learned, the growing confidence of a skill mastered—this is the process that entices you. Your excitement leads you to engage in adult learning experiences—yoga or piano lessons or graduate classes. It enables you to thrive in dynamic work environments where you are asked to take on short project assignments and are expected to learn a lot about the new subject matter in a short period of time and then move on to the next one. This Learner theme does not necessarily mean that you seek to become the subject matter expert, or that you are
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