Phil Gorman, Ph.D. 1

Strategic management  The holy grail of strategic management is creating “sustainable competitive advantage” 2

Strategic management  If you have competitive advantage then that means there is something important that you do better than your competitors 3

Strategic management  But then you also want your competitive advantage to be sustainable 4

Sustainable competitive advantage  Your business must have something that is meets the following four tests:  Valuable  Rare  Hard to copy  No good substitute 5

Sustainable competitive advantage  Your business must have something that is meets the following four tests:  Valuable  Rare  Hard to copy  No good substitute 6

Sustainable competitive advantage  Your business must have something that is meets the following four tests:  Valuable  Rare  Hard to copy  No good substitute 7

Sustainable competitive advantage  Your business must have something that is meets the following four tests:  Valuable  Rare  Hard to copy  No good substitute 8

Sustainable competitive advantage  Your business must have something that is meets the following four tests:  Valuable  Rare  Hard to copy  No good substitute 9

Sustainable competitive advantage  Example: Mobil-Exxon  Valuable  Rare  Hard to copy  No good substitute 10

Generic business strategies 11 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth

Generic business strategies 12 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth Note “cost” is not the same as “price”

Generic business strategies 13 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth General Motors

Generic business strategies 14 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth Swatch

Generic business strategies 15 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth Lincoln Electric

Generic business strategies 16 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth Hampshire College

Generic business strategies 17 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth Usually would be “stuck in the middle”

Generic business strategies 18 Source of advantage Low costDifferentiation Broad Narrow Competitive breadth Dell = process innovation Sustainable competitive advantage!

Competitive strategy  The holy grail of strategic management is creating “sustainable competitive advantage”  You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage!  Four tests:  Valuable  Rare  Hard to copy  No good substitute 19

Competitive strategy  The holy grail of strategic management is creating “sustainable competitive advantage”  You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage!  Four tests:  Valuable  Rare  Hard to copy  No good substitute 20

Competitive strategy  The holy grail of strategic management is creating “sustainable competitive advantage”  You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage!  Four tests:  Valuable  Rare  Hard to copy  No good substitute 21

Competitive strategy  The holy grail of strategic management is creating “sustainable competitive advantage”  You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage!  Four tests:  Valuable  Rare  Hard to copy  No good substitute 22