BUILDING SUSTAINABLE
COMPETITIVE ADVANTAGES
By Ivan Collinson
MBA Programme
Catholic University of Mozambique
July, 2010
catholic university of mozambique
Presentation Structure
Objectives
Evaluating and choosing business strategies: seeking sustained
competitive advantages
Evaluating cost leadership opportunities
Evaluating differentiation opportunities
Evaluating Speed as a Competitive Advantage
Evaluating Market Focus as a Way to Competitive Advantage
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Presentation Structure
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Objectives
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EVALUATING AND CHOOSING BUSINESS STRATEGIES
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Resources
Cost Advantage
Distinctive
or Value Creation
Competencies
Differentiation Advantage
Capabilities
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Competitive Advantage
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EVALUATING COST LEADEARSHIP OPPORTUNITIES
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Competitive rivalry
Truly sustained low-cost advantages may push rivals
into other areas, lessening price competition.
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Cost-Leadership Risks
Many costs-saving activities can be easily duplicated.
Exclusive cost-leadership can become a trap.
Obsessive cost cutting can shrink other competitive
advantages.
Cost differences often decline over time.
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EVALUATING DIFFERENTIATION OPPORTUNITIES
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Differentiation Risks
Imitation narrows perceived differentiation, rendering
differentiation meaningless.
Technological changes that nullify past investments or
learning.
Cost difference between low-cost competitors and the
differentiated business becomes too great for
differentiation to hold brand loyalty
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EVALUATING SPEED AS A COMPETITIVE ADVANTAGE
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Speed-based benefits:
Allows to address buyers more often.
Engender loyalty.
Increase the perceived value to the firm.
Substitutes products and new entrants keep trying
to follow the changes rather than actually
introduce them.
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Speed-Based Risks
Speeding-up activities requires serious attention to
training, reorganization and reengineering.
For those firms or industries with minimal levels of
change, maybe speeding-up will not create so much
advantage.
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EVALUATING MARKETING FOCUS AS A WAY TO
COMPETITIVE ADVANTAGE
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Focus
The extent to which a business concentrates on a
narrowly defined market (niche).
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Advantages
Allows to learn more deeply about the customers.
Promotes the establishment of personal
relationships with customers.
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Risks
Can attract major competitors which were waiting
for someone to test that market.
Fall into the illusion of using marketing focus,
rather than low-cost, differentiation or rapid
response.
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SELECTED INDUSTRY ENVIRONMENTS AND
BUSINESS STRATEGY CHOICES
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COMPETITIVE ADVANTAGE IN
EMERGING INDUSTRIES
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COMPETITIVE ADVANTAGE IN THE TRANSITION
TO INDUSTRY MATURITY
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COMPETITIVE ADVANTAGE IN THE MATURE
AND DECLINING INDUSTRIES
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COMPETITIVE ADVANTAGE IN
FRAGMENTED INDUSTRIES
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COMPETITIVE ADVANTAGE IN
GLOBAL INDUSTRIES
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DOMINANT PRODUCT/SERVICE BUSINESSES:
EVALUATING AND CHOOSING TO DIVERSIFY
TO BUILD VALUE
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II I
Turnaround Vertical Integration
Divestiture Conglomerate Diversification
Liquidation
Internal External
III IV
Concentrated growth Horizontal Integration
Market development Concentric Diversification
Product development Joint Venture
Innovation Maximize
Strengths
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OPPORTUNITIES FOR BUILDING VALUE
AS A BASIS FOR CHOOSING
DIVERSIFICATION OR INTEGRATION
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Thank you!
STRATEGIC ANALYSIS AND
CHOICE IN SINGLE OR DOMINANT PRODUCT
BUSINESSES:
BUILDING SUSTAINABLE
COMPETITIVE ADVANTAGES
By Ivan Collinson