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Student Name:

Harleen Sodhi

Student ID No.:

22011288

Unit Name:

Competitive Strategy

Unit Code:

MNG00114

Tutors name:

Assignment No.:

Assignment Title:

Due date:

Date submitted:

Janelle Mawhinney
2
Report based on published case studies
Friday 4th September, 2015
04/09/2015

Declaration:
I have read and understand the Rules Relating to Awards (Rule 3 Section 18 Academic Misconduct
Including Plagiarism) as contained in the SCU Policy Library. I understand the penalties that apply for
plagiarism and agree to be bound by these rules. The work I am submitting electronically is entirely
my own work.
Signed:

Harleen Sodhi

(please type
your name)

Date:

04/09/2015

MNG00114

COMPETITIVE ADVANTAGE CASE

ANALYSES
INTRODUCTION
Competitive advantage relates to how a strategic business unit (SBU) creates value for its
users both greater than the costs of supplying them and superior to that of rival SBUs
(Johnson et al. 2015, p.107); Google, PepsiCo and Singapore Airlines are all organisations
that possess particular strategic capabilities which contribute to their sustained competitive
advantage.
The purpose of the report is to explore and understand what capabilities lead to sustained
competitive advantage for the case organisations; analysis of the each of the cases is based
from the beginning of the organisations to present.
The following report provides evidence that each organisation has achieved sustained
competitive advantage and follows on to analyse and explain the reasons for the sustained
competitive advantage and using Porters five forces model, a Resource-based view
analysis and exploration of the implementation of Porters generic strategies. Limitations of
this report include that information examined is public information and that company
information would allow for a more in-depth analysis.
DESCRIPTION OF CASE STUDIES
GOOGLE
Google is a multinational technology organisation based in California, that specialises in
internet related products and services, including software, internet advertising, and most
famously, search (Google 2015). The case analysed is Googles strategy in 2008 written by
John E. Gamble from the University of South Alabama (Thompson, Strickland & Gamble
2008); the case examines Googles history, financial performance, business model, product
offering and execution of strategies used by Google, up until 2008.

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PEPSICO
PepsiCo is the largest food and beverage company in the US and second largest in the
world (Seabrook 2011). The case used, published in the Essentials of Strategic
Management textbook, written by John Gamble and Arthur Thompson analyses PepsiCos
diversification strategy in 2008 and examines PepsiCos strategic history, business model
and uses a variety of models to analyse PepsiCos competitive strengths and weakness,
providing strategic recommendations for the future.
SINGAPORE AIRLINES
Singapore Airlines (SIA) is an international airline company based in Singapore, the case
analysed was published by the Journal of Air Transport Management, and analyses the
strategy and organisation of SIA; the case research took place over seven years and in
particular researched the companys strategy, competitiveness and core competencies.
EVIDENCE OF SUSTAINED COMPETITIVE ADVANTAGE
GOOGLE
Google is the third most valuable brand in the world (Forbes 2015a) and is the second
largest public company in the world with a market value in excess of $367 billion (Forbes
2015b). Google has become one of the worlds most trusted and used search engines
holding over 66% of the global search market (Net Market Share 2015), followed by direct
competitor Bing with a much smaller 10% of market share.
Google has acquired over 180 companies since it launched in 1998 (D'onfro 2015). Googles
share price reached a record high in October 2013 in excess of $1,000 per share, when
compared with $85 per share in 2004 during Googles IPO (Yahoo Finance 2015), in less
than 10 years Google has experienced almost a 1200 percent increase in share price.
Googles distinctive resources regarding its established brand, human and financial resource
availability; and distinctive competencies regarding Googles unique culture concerning
office spaces and work guidelines such as 20% time (Gersch 2013) allows for a level of
innovation that provides value for customers regarding new product offerings, which is
difficult for competitors to imitate, giving Google its sustained competitive advantage.

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PEPSICO
PepsiCo owns 22 brands that generate revenues of over $1 billion per annum (Pepsico n.d.)
with the third highest market value in the beverage industry (Forbes 2015b) and, ranks in the
top 100 Forbes list of Worlds biggest public companies (Forbes 2015b).
PepsiCo is placed first, second and third globally in the savoury snacks, social beverages
and nutrition markets (Johnston & Compton n.d.), respectively; with PepsiCo outperforming
its chief competitor, The Coca Cola Company, in 2014, experiencing organic growth of 3.5%
and Coca Cola only 2% growth over the year (Forbes 2014).
PepsiCos market share of non-alcoholic beverages in the US has also increased from 26%
in 2006 (Gamble & Thompson 2010) to 28.7%; as well as, being the leader in savoury
snacks in the US with a 36.6% market share (Speculations 2015). PepsiCo possesses
distinctive capabilities that give PepsiCo a sustained competitive advantage, due to its longestablished and strong brand names, competitive distribution and manufacturing processes
and vast financial resources.
SINGAPORE AIRLINES
SIA is ranked globally as the third most valuable airline brand (Brand Finance 2012) with a
market value of over $10 billion SIA ranks in the top ten airlines in the global airline industry
(Forbes 2015b). In the airline environment, an industry ranked as one of the worst
performing in the Fortune Global 500 rankings, SIA has never posted a loss on an annual
basis, achieving substantial returns superior for its industry, and in comparison to
competitors (Heracleous & Wirtz 2009). SIA owns its entire fleet of 104 aircrafts, unlike
competitors who lease a major fraction of their fleet; SIAs fleet has an average age of 7
years, making SIA one of the worlds youngest and most fuel efficient airlines (Singapore Air
n.d.), giving SIA distinctive resource capabilities allowing for SIAs sustained competitive
advantage.
ANALYSIS
GOOGLE
The Resource Based View (RBV) approach to competitive strategy argues that internal
resources are more important to a firm than external factors when trying to achieve and
sustain competitive advantage (David 2009). There are four key criteria to whether a
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businesss capabilities can be assessed in terms of providing competitive advantage. These

are that the capabilities have value, rarity, inimitability and non-substitutability
(VRIN) (Johnson et al. 2012).
Value of Strategic Capabilities
Google creates value for customers through the provision of relevant information and
websites rapidly. Google is taking advantage of opportunities for innovation, such as, 20%
time and Googles Adsense program which has brought value for advertisers as Google
directs visitors to websites, generating revenue through increased traffic, as well as, creating
profits for Google. Google holds 66% of the global search market (Net Market Share 2015)
due to its ability to meet customers search requirements in the first few links, which is
essentially a distinctive capability and is valuable to customers
Rarity
Googles capabilities are rare because of their unique skills regarding displaying relevant
search results and at a rapid rate; competitors such as Microsofts Bing find it difficult to
match the search results provided by Google. Google also possesses intellectual capital in
the form of particularly talented individuals, hiring only those who meet a strict criterion
including factors such as leadership, cognitive ability and googleyness (Reilly 2014); giving
Google distinctive capabilities in the form of intellectual capital and talented individuals.
Inimitability
Inimitable capabilities are those capabilities that competitors find difficult to imitate or obtain
(Johnson et al. 2012). Google possesses causal ambiguity because the capability is difficult
to discern, as there are key financial and physical resources (such as one of the worlds
largest databases (Compare Business Products n.d.) available for Googles use, which they
do, competently, giving them a greater advantage over competitors; however, the primary
capability of Google is based on talent and innovation produced through employees tacit
knowledge and experience, that is difficult for competitors to pin and imitate.
Non- Substitutability
Threat of substitutes in the technology industry is high, Google has valuable and inimitable
qualities, and the online world is quickly developing, with many different ways of accessing
information, Google search is debatably most efficient. Google excels when it comes to
providing relevant search results and quickly, giving it a competitive advantage for now, but
innovation is consistently required to maintain and, create more for value for customers and
to sustain competitive advantage.

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The use of the RBV determines that sustained competitive advantage is achieved through
innovation using distinct capabilities that Google possesses; the utilisation of distinctive
resources and capabilities by Google has lead to this sustained advantage, as the resources
are inimitable, valuable, rare and hard to substitute.
PEPSICO
Porters Five Forces framework is used to identify the attractiveness of an industry in
terms of five competitive forces...new entrants, substitutes, supplier power, buyer power and
competitive rivalry. (Johnson et al. 2015, p.28) , the framework is also used as a useful
starting point for strategic analysis, as it aids in setting an agenda for action on critical issues
identified by the framework (Johnson et al. 2015, p.28).
Competitive Rivalry

New Entrants

Buyer Power
Supplier Power

Substitutes

Moderate. There is risk of diversification from a direct competitor such as Coca

Cola, a firm that is of roughly equal size. However, PepsiCo and Coca Cola are
in a duopoly, which means that smaller players are reluctant to challenge the two
organisations; high fixed costs and entry barriers also reduce competitive rivalry
Low. Beverage and snack industry is fairly saturated, and high investment
requirements are needed to successfully enter the market, as well as, a small
number of multinationals dominating the market share, creating retaliation risks
such as, price wars.
High. Many substitutes available, with low cost of switching leading to a higher
degree of price sensitivity, giving leverage to buyers over firms
Low. Less concentrated supplier, as there is a large number of them and
switching costs are relatively moderate, with the cost of losing a client like
PepsiCo being a greater financial risk for the supplier than it would be for
PepsiCo
High. Numerous alternatives of drinks available that are targeting the same
market, in not only the beverage industry but also in the savoury snack industry

The five forces are moderate, which for smaller firms would make the industry less attractive;
however, PepsiCo is already well established with a high degree of brand loyalty, making the
industry very attractive. Coca cola is one of PepsiCos fiercest competitors in the beverage
industry which was threatening PepsiCos profitability; PepsiCos strategic use of a mergers
with Frito-Lay into the savoury snack industry and acquisitions of both fast food outlets such
as Taco Bell, and the nutritional market with Quaker Oats (Gamble & Thompson 2010) has
lead to the diversification of PepsiCos portfolio and has aided in PepsiCos achievement of
sustained competitive advantage, particularly as the leader in the savoury snacks industry.
It should be noted that due to changing consumer preferences and mature nature of the
beverage and snack market, PepsiCo should continue a product proliferation strategy as
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noted in the case, and use dynamic capabilities to innovate and develop new products, to
ensure PepsiCos competitive advantage remains sustained.
SINGAPORE AIRLINES
On the business level, SIA uses a dual strategy of using two generic strategies
simultaneously, that is, cost leadership and differentiation (Heracleous & Wirtz 2009);
entitled by Porter as stuck in the middle and as risky (Johnson et al. 2015, p.114). SIAs
attainment of delivering premium service at expenditures close to those of a budget carrier
challenges Porters belief of differentiation and cost leadership being mutually exclusive
strategies (Heracleous & Wirtz 2009). Corporate level strategy at SIA displays a related
diversification strategy, with SIA consisting of 36 direct subsidiaries and direct companies
(Heracleous & Wirtz 2009). As part of SIAs international strategy SIA has joined in an
alliance with Star Alliance, one of the three major airline alliances.
SIA has achieved a sustained competitive advantage through the practice of SIAs five
pillars of organisational activity including: rigorous service design and development, total
innovation, profit consciousness ingrained in all employees, achieving strategic synergies,
and developing staff holistically (Heracleous & Wirtz 2009), these distinctive competencies
have positioned SIA as a premium service carrier with high levels of innovation and costeffective service excellence, that is difficult for competitors to imitate giving SIA sustained
competitive advantage.
COMPARISON
PepsiCo uses a diversification strategy to achieve sustained competitive advantage due to
the mature nature of the snack and beverage industry, and rivalry from fierce competitors
such as Coca Cola and Kraft, which own the primary substitutes of PepsiCo products. SIA
similarly, uses a related diversification strategy, due to the substitutable nature of airline and
transport options and to diversify its portfolio, reducing risk from changing external factors.
Google is already a diversified organisation as its offering is rare with many subsidiaries, and
possesses valuable, rare, inimitable and non-substitutable capabilities, which has reduced
its rivalry outcompeting Google, as can be seen by the large difference between Googles
66% market share lead and Bings second largest 10% market share (Net Market Share
2015). The nature and rapid development of the technology industry leads Googles primary
strategy to be innovation to improve current products and create new ones through Googles
20% time allowing for employees to work on side projects.
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Innovation is a key strategy for both SIA and PepsiCo also, as innovation is a key driver of
economic growth and business success (Brooks 2013).
CONCLUSION
Three organisations competing in three different industries have been analysed with the
evidence of sustained competitive advantage being presented, followed by an analysis of
how the sustained advantage was achieved with the support of Porters five forces model,
generic strategies and resource based view. Each organisation has achieved a sustained
competitive advantage in their respective industry, with Google holding the greatest
competitive advantage due to the uniqueness of its product offering and competitor
inimitability.

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