DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 1 Competitive Advantage: Is DQE the base of competitive advantage? Prof. Spyros Lioukas, Dr Irini Voudouris Athens University of Economics and Business

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 2 Objectives: Learners will Understand the meaning of competitive advantage Understand what are the main types of competitive advantage Identify “how” competitive advantage may be created Recognize the basis of sustainable competitive advantage Distinguish the “new” bases of competitive advantage Identify how the DQE approach enhances the creation of sustainable competitive advantage

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 3 What is Competitive advantage? –… a basis for the firm’s long term success? –… a basis for value creation? Do we really know where it resides? Can it be sustainable?

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 4 What is Competitive advantage? “When two or more firms compete within the same market, one firms possesses a competitive advantage over its rivals when it earns a persistently higher rate of profit (or has the potential to earn a persistently higher rate of profit)” R. M. Grant, 2000

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 5 Cost advantage Differentiation advantage Competitive advantage Competitive advantage Similar product at lower cost Higher price for unique product The main types of Competitive Advantage

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 6 Types of competitive advantage Low costDifferentiation Cost leadership Differentiation Industry-wide Niche Focus with low cost Focus with differentiation Market Competitive strategies by Porter

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 7 Types of competitive advantage Low costDifferentiation Cost Leadership Differentiation Industry-wide Niche” Focus with low cost Focus with differentiation Market Competitive strategies extending Porter Hybrid Strategy  “ In-between” there might be a successful strategy (Value for Money)  Hybrid strategies can be more effective

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 8 Features of competitive strategies Cost Leadership Efficient scale Standardization Design for low production cost Control of overheads and R&D Avoid marginal customersDifferentiation Quality Innovation Design Credibility Brand name Reputation Environmental posture Customer service Integrated services

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 9 Sustainable competitive advantage What is meant by sustainable competitive advantage? –Durable –Valuable to the firm Exploiting weaknesses and neutralizing threats –Unique –Difficult for competitors to imitate –Not easily substitutable

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 10 May competitive advantage be sustainable? Increased competition leads to decrease of differences in competitive advantage Standardization/ mass production of unique features: What can be left for differentiation? Unique features of differentiation become prerequisites for survival Dynamism & complexity of the environment

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 11 How can competitive advantage be sustainable? The firm must seek competitive advantage in combining resources & capabilities –Develop resources and capabilities, which are rare, valuable, non-tradable, –Make those resulting competences sustainable by precluding imitation or substitution by competitors The firm must offer competitive products

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 12 Sustainable competitive advantage …based on capabilities Innovation Reputation Architecture of relationships Strategic assets DQE J. Kay’

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 13 Competitive advantage “map” Customized product Quality Low cost Operational performance Delivery time Creditability Product Service Design Marketing Customer service Customized product Innovative product PrerequisitesElements of differentiation Quality Low cost Oper. performance Delivery time Creditability Product Service Design Marketing Customer service Innovative product Source: “Competitiveness: Strategies of the best UK companies”, Winning DTI-CBI Reputation

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 14 Sustainable competitive advantage …reflected on product Quality and quality of customer service Design Innovative product Customized product with integrated services Environmental friendly

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 15 References R.M. Grant, Contemporary Strategy Analysis, Blackwell Publishers, M.E. Porter, Competitive Advantage, New York: Free Press, J. Kay, Foundations of Corporate Success, Oxford University Press, G. Johnson, K. Scholes & R. Whittington, Exploring Corporate Strategy, Prentice Hall, 7 th eds, 2005 C. Prahalad & G. Hamel, “The core competences of the corporation”, Harvard Business Review, vol. 28, n.3, may-june, 1990.

DQE Towards the Sustainable Region /DQE / 2NOO27I Project co-financed by the Structural Funds 16 References S. Marthur, “How firms compete?” The Journal of General Management, vol.14, no 1, autumn F. Tilley, P. Hooper & L. Walley, “Sustainability and competitiveness: Are there mutual advantages for SMEs?”, in J. Oswald & F. Tilley, Competitive Advantage in SMEs: Organising for innovation and change, Wiley, K. Weigelt &C. Camerer, (1988), “Reputation and Corporate Strategy: A review of recent theory and applications”, Strategic Management Journal, 9