Chapter Six Competitor Analysis and Sources of Advantage

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-2 Competitor Analysis and Sources of Advantage Sources of competitive advantage: –Cost advantage –Differentiation advantage –Marketing advantage Knowledge as a source of advantage Competitor intelligence Industry analysis Sustainable advantage

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-3 Competitive Advantage and Knowledge What is a competitive advantage? (P207, Fig. 6-3) How does a firm establish a competitive advantage? (p217) Knowledge advantage How does a firm leverage knowledge as a competitive advantage? attack obliquely How does a competitive advantage relate to profit potential? Figure 6-1 Competitive Advantage and Customer Value

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-4 Competitive Advantage Figure 6-3 Sources of Competitive Advantage

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-5 Cost Advantages Three types of cost advantage: –Variable Cost Advantage –Operating Cost Advantage –Marketing Cost Advantage How do firms achieve these advantages? –Scale effects –Scope effects –Learning effects

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-6 Cost Advantage and Profitability Figure 6-4 Cost Advantage and Profitability

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-7 Differentiation Advantages Three Types of Differentiation Advantage –Product advantage –Service advantage –Reputation advantage

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-8 Differentiation Advantage and Profitability Figure 6-8 Product Differentiation Advantage and Profitability

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-9 Marketing Advantages Three Types of Marketing Advantage –Market share –Product line –Channel

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-10 Market Share Advantage and Profitability Figure 6-11 Market Share Advantage and Profitability

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-11 Competitive Strategy Based on a Knowledge Advantage Figure 6-14 Competitive Strategy Based on a Knowledge Advantage

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-12 Competitor Intelligence Figure 6-15 Customer Perceptions of Inter-brand Differentiation

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-13 Industrial Analysis 1.Barriers to Entry 2.Barriers to Exit 3.Customer Buying Power 4.Supplier Selling Power 5.Substitutes 6.Competitive Rivalry Why should a firm conduct an Industry Analysis? to see if the environment attractive or not What are the Industry Forces? How are they (the industry forces) related to profit potential? see the text details What is the Prisoner’s Dilemma?

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-14 Industry Analysis Figure 6-21 Industry Analysis: Industry Forces and Profit Potential

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-15 Sustainable Advantage Figure 6-23 Competitive Forces that Shape Competitive Position and Profitability

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-16 Review Sources of competitive advantage: –Cost advantage –Differentiation advantage –Marketing advantage Knowledge as a source of advantage Competitor intelligence Industry analysis Sustainable advantage

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall6-17 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall