1. Business Plan Preparation Competitive Advantage
Business Plan Preparation Competitive Advantage
Frank Moyes Leeds School of Business University of Colorado Boulder, Colorado
Competitive Advantage

2. Tonight Locomotion business plan presentation Competitive Advantage
Value proposition
In the Fire: opportunity/need
Hand-in
Interview list
Opportunity/Need – 2 paragraphs
Competitive Advantage

3. Next Week PRODUCT/SERVICE Elevator Speech Investor Presentations
Read BP pp 6-7
Elevator Speech
Investor Presentations
In the Fire:
Prelim Market Analysis Research
Prelim Interview Results
Hand-in
Value Proposition
Competitive Advantage

4. Value Proposition - 3 Elements
What are the features?
Who is the target market?
What are the benefits?
Competitive Advantage

5. Features
Describe the product or service - range, environment, employees
What are the key product/service attributes (performance, cost, quality, social, availability, service, and environment)?
How is the product/service produced and delivered? Does the process provide a competitive advantage?
Competitive Advantage

6. Target Market Demographics Psychographics or life style
Social status: infers certain behavior
How are buying decisions made? What are the criteria? Who makes the decision? Who influences the decision?
Competitive Advantage

7. What Are the Benefits?
Emotional: ambition, power, independence, achievement, ambition, pride of ownership, comfort, love, friendship, security, style, self Improvement, etc.
Social: status, image, popularity with friends or family members, reputation of brand, personal relationships, style, fashionable, etc.
Health: stress, fitness, mental capacity, strength, sex life, quality of life, muse, etc.
Financial: revenue, costs, savings, productivity, pricing, profitability, market share, save time, productivity, etc.
Life style: convenience, saves time
Competitive Advantage

8. Value Proposition Format
“XYZ is a_______[describe] company. By its _______[feature(s)], it provides ______ [unique benefit(s)] to ______[target market]”
Competitive Advantage

9. Simple Value Proposition SST Corporation
“SST is a stainless steel toothbrush company. By its one bristle brush made of high tensile stainless steel, it provides an exhilarating tooth cleaning experience to thrill-seeking X-gen consumers”
Competitive Advantage

10. Simple Value Proposition Dell Computer
“Dell Computer sells personal computers to consumers. Our build-to-order manufacturing and customer-direct sales enable us to offer custom built computers at very competitive prices. Our customers get the computer that they have always imagined and save money.”
Competitive Advantage

11. Simple Value Proposition Vic’s Coffee
“Vic’s Coffee is a Boulder based coffee house. Its gourmet coffee, convenient location and fast service, provide a welcoming environment for people who want to meet with their friends for a stimulating morning coffee and for on-the-go business people.”
Competitive Advantage

12. Simple Value Proposition Flowers
Proflowers serves the “price sensitive and convenience oriented customers” with the “freshest cut flowers at a competitive price”, because of their unique sourcing and Fed/Ex shipping arrangements.
FTD.com serves the “mid-to high-end market” by providing the “easiest way to send flowers and gifts” because of their strong brand name, market communications and supplier network.
e-Commerce; Rayport & Jawroski
Competitive Advantage

13. Sustainable Competitive Advantage
Prolonged advantage of implementing some unique value-creating strategy
not simultaneously being implemented by any current or potential competitors along with the
inability to duplicate the benefits of this strategy.
Competitive Advantage

14. Typical Competitive Advantages
Typical Competitive Advantages
Intellectual property
Agreements with customers or suppliers
Long term contracts
Control of costs
Control of prices
Control of channel
Location
First to market
World class management
Expertise
Development lead time
Brand
Quality
Service
Execution
Relationships
First mover – Allen p 6
Not often successful in technology products. More often it is the second or third
Apple’s Newton lost to Palm Pilots pda
Microsoft Explorer late
Scalable
Difficult for a new venture to scale; lack infrastructure and systems and can’t afford to create. Management experience
Advantages
Makes it more difficult for followers to raise vc
Competitive Advantage

15. Sustainable Competitive Advantages
Sustainable Competitive Advantages
Resources and capabilities
Innovation
Differentiation
Technology
Really understand the market
Really understand competition
Resources (assets of the company)
Financial - access to capital (equity & debt), cash reserves, government grants, etc.
Physical assets - plant & equipment, raw materials, location, working capital, etc.
Human - social, employee knowledge, experience, accumulated wisdom, labor cost and skills, etc.
Intangible - patents, trade secrets, know-how, copyrights, databases, etc.
Organizational - culture, contacts, policies, Boards of Directors & Advisors, suppliers, service providers, etc.
Capabilities (organizing and managing resources)
Marketing - differentiation, branding, positioning
Product/service - design features & benefits
Sales & distribution - rep organization
Operational approach - Dell, Wal-Mart
Supply chain management - Asia contacts
Relationships - regulators, politicians, investors
Why is this so hard?
Competitive Advantage

16. Competitive Advantages Difficult to Achieve & Sustain
Competitive Advantages Difficult to Achieve & Sustain
Most are easily copied
Entrepreneur ignorant of or ignores competition
Entrepreneur is not realistic about own resources & capabilities
Entrepreneur ignores future
Entrepreneur must be intellectually honest
Competitive Advantage

17. Identify the Venture’s Resources
Financial: access to capital (equity & debt), cash reserves, government grants, etc.
Physical assets: plant & equipment, raw materials, location, working capital, etc.
Human: social, employee knowledge, experience, accumulated wisdom, labor cost and skills, etc.
Intangible: patents, trade secrets, know-how, copyrights, databases, etc.
Organizational: culture, contacts, policies, Boards of Directors & Advisors, suppliers, service providers, etc.
Competitive Advantage

18. Identify the Venture’s Capabilities
World class management (serial entrepreneur)
Well developed, high-quality, accessible contacts that take years to build
Sales and marketing experience
Science or technology expertise
Supply chain expertise
Product/service design expertise
Sales & distribution organization
Total operational approach (e.g. Dell, Wal-Mart)
Competitive Advantage

19. What Barriers Can You Establish?
Intellectual property: patents, trade secrets, copyrights, trademarks, etc
Switching costs to your target market
Customer loyalty
Agreements with customers, suppliers, strategic partners
Control of the distribution channel
Competitive Advantage