UNIT – II

COMPETITIVE ADVANTAGE
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UNIT – II
COMPETITIVE ADVANTAGE
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INTRODUCTION

“Environment is the aggregate of all conditions, events and

influences that surround and affect it.”
- K. Davis 
(The Challenges of Business)
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BUSINESS ENVIRONMENT
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PORTER'S FIVE FORCES MODEL
INDUSTRY CONCENTRATION
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STRATEGIC GROUP

A strategic group comprises business units or firms that ‘‘pursue similar strategies with similar
resources.’’
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COMPETITIVE ADVANTAGE
STRATEGIC
QUESTIONS:
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A competitive advantage is an advantage over
competitors gained by offering consumers greater
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value, either by means of lower prices or by providing
greater benefits and service that justifies higher
prices. 

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COMPETITIVE CHANGES DURING INDUSTRY EVOLUTION

GLOBALIZATION AND INDUSTRY STRUCTURE

Globalization is a process of interaction and integration among the people, companies, and
governments of different nations, a process driven by international trade and investment and
aided by information technology.

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NATIONAL CONTEXT AND COMPETITIVE ADVANTAGE RESOURCES
The situation in a country regarding production factors, like skilled labor, infrastructure, etc., which are relevant for competition
in particular industries.

the state of home demand for products and services produced in a country.

The existence or non-existence of internationally competitive supplying industries and supporting industries.

The conditions in a country that determine how companies are established, are organized and are managed, and that determine the
characteristics of domestic competition.
COMPONENTS OF INTERNAL ANALYSIS

The term ‘Resources’ may be defined as the stock of assets and skills that belong to an
organization at a point of time.

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Capability is defined as the ability of a bundle of resources to perform an activity. It is a way of
combining assets, people and processes to transforms inputs into outputs. This can be presented
mathematically thus:
C = F (TA, IA, S)
Where C = Capability, TA = Tangible Assets, IA = Intangible Assets and S = Skills

the basic economic and strategic means by which a firm builds an underlying source
of competitive advantage in a market or industry
A Core Competency is a deep proficiency that enables a company to deliver unique value to
customers.

The Core Competence of the

Corporation

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“Value chain analysis (VCA) is a process where a firm identifies its primary and support
activities that add value to its final product and then analyze these activities to reduce costs or
increase differentiation.”

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GENERIC BUILDING BLOCKS OF COMPETITIVE ADVANTAGE

Efficiency is measured as a ratio between costs of

inputs required to produce a given output.
Quality of Goods and services indicates the reliability of doing the job, which the product is intended for.

Innovation means new ways of doing things.

Customer responsiveness is determined as the customization of products, quick delivery time,

quality, design and prompt after sales service.

DISTINCTIVE COMPETENCIES

A distinctive competency is a unique firm-specific strength that allow a company to better

differentiate its products and/or achieve substantially lower cost than its rivals and thus gain a
competitive advantage.
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DURABILITY OF COMPETITIVE ADVANTAGE

the greater the barriers to imitation, the more sustainable are a company’s competitive advantage
AVOIDING FAILURES & SUSTAINING COMPETITIVE ADVANTAGE