Competitive advantage MS 2

Strategic management

Involves intended and emergent initiatives that use organisational resources to create sustainable competitive advantages and improve organisational performance

Competitive advantage

Combination of a firms internal and external conditions used to create superior customer value, rwsuslting in superior film performance

The 4 theories used to identify sources of competitive advantage?

Structure-conduct-performance paradigm: industry structure

Resource-based view: organisational resources

Dynamic capabilities: adapting to external changes

Market-based view: effective market positioning

The structure-conduct-performance paradigm (SCP)?

Explains how industry structure influenced firm behaviour and performance

Structure: competitive conditions

Conduct: product, pricing, communication and distribution strategies

Performance: profitability, technological progress and employment

The 4 main market structures?

Perfect competition: many firms offering homogeneous products

Monopolistic competition: many firms offering differentiated products

Oligopoly: a few dominant firms

Monopoly: one dominant firm with no close substitutes

What is the resource based view (RBV) of the firm?

The RBV sees tangible and intangible organisational resources that differ between firms and are immobile across firms as the foundation of competitive advantage

The 4 characteristics of resources that may provide competitive advantage?

Valuable: improve efficiency or effectiveness

Rare: unavailable to competitors

Imperfectly imitable: difficult for competitors to copy

Non- substitutable: cannot be replaced by another non rare source

Difference between resources, capabilities and core competencies

Resources: tangible and intangible assets, e.g. employees, skills, equipment, data & intellectual property

Capabilities: purposeful combinations of resources that contribute to value creation

Core competencies: capabilities crucial to creating superior customer value

What does Penrose (1959) mean when she argues that resources are fungible?

The same resource can provide different services depending on its purpose, how its used and how its combined with other resources

What are core rigidities?

They develop when firms over-rely on existing core competencies that become obsolete as the environment changes, preventing adaptation

What are dynamic capabilities?

Organisational processes that integrate, reconfigure, gain and release resources to match and create market change

The three forms of dynamic capabilities?

Integrate resources: combine resources across different functions

Reconfigure resources: create new combinations of knowledge and resources

Gain and release resources: acquire external technologies or release resources

What did Eisenhardt and Martin (2000) examine?

Dynamic capabilities: organisational and strategic processes through which firms reconfigure resources as markets evolve and change

What Three characteristics make competitive advantages difficult to create proactively?

Path-dependant: shaped by the firms history

Idiosyncratic: unique to the firm

Tacit: difficult to explain or transfer

What is the market-based view of the firm?

It sees effective market positioning strategies, based on careful analysis of the market environment, as the foundation of competitive advantage

What’s cost leadership strategy?

Minimising costs and offering low prices while focusing on basic functional benefits to appeal to price-sensitive customers

What is differentiation strategy?

Creating unique value proposition through emotional, experiential, psychological or social benefits, appealing to customers willing to pay more

What is concentration strategy?

Focusing on narrow market segment to avoid broad competition using either low costs or differentiation

Difference between points of parity and points of differentiation?

Points of parity: attributes or benefits that establish that a brand meets the expectations needed to compete

Points of differentiation: attributes or benefits that make a brand distinctive or superior to competitors