Value Propositions and competitive Advantage

2 Getting to Strategy Where are the opportunities? Vision Strategy Environmental conditions Competitor activity YOU why are you doing this? what do you have to offer? your values Customers wants needs & values Competitive Advantage Plan

Competitive Advantage The thing that enables you to gain an advantage over your competitors 3

4 Sources of Competitive Advantage Either position is okay Avoid getting “stuck in the middle” The best value position must represent value from the clients perspective To sustain the lowest cost provider position you must have a cost structure that is lower than your competitors Lowest cost provider Best value provider Michael Porter (1985)

5 Tender market traps you into the lowest cost position Why medium sized commercial building contractors go bust

6 Think of three different ways one of the following can do business on a “best value basis” Building Contractor Quantity Surveyor Property Developer

© Unitec New Zealand 7 The Strategy Clock Exhibit 5.2a Note: The strategy clock is adapted from the work of Cliff Bowman (see D. Faulkner and C. Bowman, The Essence of Competitive Strategy, Prentice Hall, 1995.) However, Bowman uses the dimenstion ‘Perceived Use Value’.

© Unitec New Zealand 8 The Strategy Clock Exhibit 5.2b

9 On Moodle

10 To achieve competitive advantage you need to specialise! I can do it cheaper because I have a lower cost structure through: Investment in technology Better knowledge base I provide better value through: Better knowledge base Better technology

Your intended source of competitive advantage has to represent real value to the customer I want it cheaper, faster, better. I want it more reliable I want it different but I can’t get it >>DEPARTMENT of CONSTRUCTION