strategy and organisation
Singapore airlines appears to have competitive advantage from
- lower costs than many of its rivals - better plane utilisation rates than its rivals - better service levels than many of its rivals
Steps in the Value Chain
- use the value chain template to break down the firm into its key activities - analyse each activity and its drivers to look for ways to reduce cost and/or increase willingness to pay - decide on a customer value proposition (CVP) and a set of activity choices to efficiently deliver it.
the bargaining power of suppliers is likely to be high
- when suppliers' industry's concentrated - when they are supplying differentiated products - when the industry with which the suppliers are transacting is relatively fragmented
competitive advantage can be defined as
A firm's ability to earn a persistently higher profit rate than its rivals
in our discussion of the resource based view of the firm, we categorise the resources of the firm as:
Human, Intangible and Tangible
A country has a comparative advantage
In producing those products or services that make intense use of those resources in which it has a relative abundance
Resource Analysis
Systematic identification of resources & capabilities - Systematic listing of resources - Functional analysis of capabilities - Value chain activity-based identification of capabilities Appraisal of resources & capabilities: VRIO - Valuable, Rare, Inimitable and Organized to capture value Isolating mechanisms - Physical uniqueness - Path dependence - Causal ambiguity - Social complexity - IP protection
invention and innovation
are linked concepts. innovation is the commercialisation of invention
a resource is costly to imitate if
competitors can't develop the resource for a reasonable price
three characteristics of resources and capabilities determine the sustainability of the competitive advantage they offer:
durability, transferability and replicability
The firm is organization to capture value through
effective internal organizational structure and coordinating systems
the basis of entering a new industry at the Introduction phase is:
efficient product innovation
the most often sited benefits of diversification are:
growth, risk reduction and value creation
a resource is valuable if
it helps to exploit an opportunity or offset a threat
in its first, largely European, internationalisation phase IKEA:
made minimal change to its products and processes
a resource is rare if
only one or a few firms possess it
Strategy and Tactics
relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively
strategic goals should be
simple, consistent and long term
of Michael Porter's 3 tests of whether a proposed diversification will create value, the most important one is usually:
the "better-off" test
Porters 5 forces model is intended to be
used as a conjunction with the PEST and other models