Session 2: Strategic Management & Competitive Advantage

Presented by Prof. (Dr.) Manish Popli

 Recap (1/2)

• Strategic Management deals with 2 BASIC References:

Sustainable
• Firm competitive
• Environment Advantage

• What do we study in Strategic Management?

• How and Why some Firms “Outperform” others (Returns)

• How do they Sustain such Performance (Time)

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 Recap (2/2)

• Competitive Advantage can be defined as the

• ability of a firm to outperform its industry

• to earn higher rates of profits than the industry norm.
• Create more value for the customer than the competitor does

In simple terms, it is the ability to have above-average returns!

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Learnings from the Readings

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 Definitions

• Strategy:

is defining a company’s position, tradeoffs and forging fit among activities

OR

An integrated and coordinated set of commitments and actions designed to exploit

core competencies and gain a competitive advantage.

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 Execution or Strategy?

Perform SAME
activities as Perform DIFFERENT
ACTIVITIES
rivals, execute activities from Rivals
better
Meet Different needs
Meet same needs at and or
VALUE CREATED
lower cost same needs to
lower cost
Cost advantage Sustainably
ADVANTAGE but hard higher prices and or
to sustain lower costs

Be the BEST,
Be UNIQUE, Compete
COMPETITION compete on
on STRATEGY
EXECUTION

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 Competitive Advantage

• A firm has Competitive Advantage over its rivals if it can drive a wedge between
willingness to pay it generates among buyers and the cost it incurs.

• To create an Advantage a firm must configure itself to do something unique and

valuable  it must ensure that if it were to disappear, someone in the network would
miss it and no one could replace it perfectly.

• Competitive advantage comes from the full range of firm’s activities – production,
finance, logistics, marketing- acting in harmony.

A firm has competitive advantage when it implements a value creating strategy

not simultaneously being implemented by any present or potential competitor

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 Creating Competitive Advantage: Value Proposition

What end users? What Products/Services?

What Channels? Which features?

WHICH CUSTOMERS WHICH NEEDS

WHAT RELATIVE
PRICE

Discount?/Premium?

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Thanks!