Competitive Advantage Katerina Zacharia

© Katerina Zacharia June 2007 Competitive Advantage  Creates a moat around a business such that it can keep competitors at bay and reap extraordinary growth and profits Whitney Tilson, 2000  The way an enterprise determines its positioning in the market in relation to its competitors  Creates a moat around a business such that it can keep competitors at bay and reap extraordinary growth and profits Whitney Tilson, 2000  The way an enterprise determines its positioning in the market in relation to its competitors

© Katerina Zacharia June 2007 Defining Process 1.Identify the company’s core competency  Conduct SWOT Analysis  What does the enterprise do best?  Ex. Operational excellence  Ex. Customization  Ex. Price and convenience 1.Identify the company’s core competency  Conduct SWOT Analysis  What does the enterprise do best?  Ex. Operational excellence  Ex. Customization  Ex. Price and convenience

© Katerina Zacharia June 2007 Defining Process 2.Research competitive landscape  Identify competitors  Conduct competitive analysis 2.Research competitive landscape  Identify competitors  Conduct competitive analysis

© Katerina Zacharia June 2007 Competitive Analysis  Analyze key variables  Product mix  Service offerings  Pricing  Brand: perception of quality  Packaging  Distribution  Analyze key variables  Product mix  Service offerings  Pricing  Brand: perception of quality  Packaging  Distribution

© Katerina Zacharia June 2007 Defining Process 3.Determine the value proposition  Clear statement of the tangible results a customer gets from using your products or services  Perceived benefits to the customer  The more specific your value proposition is, the better 3.Determine the value proposition  Clear statement of the tangible results a customer gets from using your products or services  Perceived benefits to the customer  The more specific your value proposition is, the better

© Katerina Zacharia June 2007 Defining Process  Identify competitive advantage  Can the firm provide a long-term advantage that is not easily replicated?  Identify competitive advantage  Can the firm provide a long-term advantage that is not easily replicated?

© Katerina Zacharia June 2007 Key Point  Value proposition  Defined from the customer’s perspective  Competitive advantage  Defined from the firm’s perspective  Value proposition  Defined from the customer’s perspective  Competitive advantage  Defined from the firm’s perspective

© Katerina Zacharia June 2007 Guess the value proposition?

© Katerina Zacharia June 2007 Value Proposition WalmartPrice MicrosoftEase of use, accessible DellCustomization Coca ColaBrand, taste AppleUnique products, design, usability McDonald’sConvenience, consistence MercedesLuxury, quality StarbucksCustomization, quality, consistency

© Katerina Zacharia June 2007 Define competitive advantage

© Katerina Zacharia June 2007 Competitive Advantage WalmartPrice/Convenience/Buyer Power MicrosoftPervasive, Product Offering DellPrice and Service Coca ColaDistribution AppleProduct differentiation, innovation Market drivers McDonald’sOperational Excellence (consistency) MercedesQuality StarbucksBrand and service

© Katerina Zacharia June 2007 Classroom Activity  In groups of 4:  List top five favorite music artists  Define value proposition  Determine competitive advantage  In groups of 4:  List top five favorite music artists  Define value proposition  Determine competitive advantage