Integrative Methods for Sustainable Competitive Advantage

Gheorghe TOLU
Polytechnic University, Bucharest, Romania, email: georgetolu@gmail.com
Daniel GHICULESCU
Polytechnic University, Bucharest, Romania, email: daniel.ghiculescu@upb.ro

Abstract
The paper deals with some integrative methods applied by a Romanian organization, manufacturer of
electrical discharge machines, aiming at Sustainable Competitive Advantage (SCA). Some aspects of
the strategic management process are presented, emphasizing the stage when the integrative methods
must be applied. Some fundamental aspects of Customer Matrix, Producer Matrix and Risk Cube are
presented. Finally, they are applied for the mentioned above organization, determining some solutions
leading to SCA.

Keywords: Sustainable Competitive Advantage, Customer Matrix, Producer Matrix, Risk Cube.

1. Introduction
The strategy of an organization is the result of the strategic choice of its management regarding the
paths it will follow and the means it will use to achieve the strategic objectives. The ways to achieve
the strategic objectives are multiple, in this sense, the management of the organization must have clear
options of how to achieve the strategic objectives. The main factors of an organization's strategy are
resources, deadlines, sustainable competitive advantage. Resources are provided in strategies, usually
globally or in the form of investment funds, and the origin of these funds could be own resources or
borrowed resources. Strategic resources are material, human, informational and financial resources.

The terms incorporated in the strategy include: the initial term that represents the start date of the
strategy, intermediate terms that represent the significant evolutions in the achievement of the strategic
objectives, the final term that stipulates the date on which the implementation of the strategy ends.
Competitive advantage is considered a fundamental priority for the management of the organization.
The purpose of the strategy is to create and maintain a competitive advantage over competing
organizations. Competitive advantage means that the organization achieves superior products from the
Customer's point of view, compared to similar products offered by the competition. The advantage can
be measured by cost advantages, differentiation, and market focus and is mentioned in the book
“Competitive Advantage” written by Porter (2003).

Cost advantages that allow the organization to obtain higher profit margins than their competitors, even
if they set their prices around or below market prices. Differentiation is the provision by the
organization of a product or service, which is perceived by consumers as unique in the market,
completely different from other products and services. Market focus is the ability of the organization
to cover an individualized market.

2. Strategic Management
Strategic Management is the process by which strategies are formulated and implemented. The strategic
dimension of management is ensured by the existence of a strategic thinking and an organizational
culture favorable to change and performance in an external competitive environment. The competitive
advantage achieved by an organization in relation to other organizations with which it is in competition,
designed over time, gives the organization a strategic competitiveness. The fundamental principles of
Strategic Management are setting the direction, concentrating efforts, and ensuring consistency and is
mentioned in the book “Strategic Management” written by David et al (2016).

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2.1. Strategic Management Process Model

Strategic Management is a complex process and is represented in the Figure 1.

Fig. 1. Strategic Management Process Model is mentioned in the book “Strategic Management”
written by Wheelen et al (2010).

The analysis of the external environment represents the starting point for the realization of the strategy.
The external environment is general and competitive. The analysis of the internal environment
includes: the structure, the culture, the resources, the capabilities, the essential competencies, and the
possibilities of obtaining the sustainable competitive advantage. The formulation of the strategy
consists in establishing the vision, mission, objectives, and strategic options. The implementation of
the strategy is the realization of the strategic plan through specific programs, budgets, methods.
Performance evaluation and control is done by reporting to objectives and making corrections and is
mentioned in the book “Strategy for Enterprise” written by Butler (2005).

2.2. Quality Management

The design and implementation of a Quality Management system, which is essential to be associated
to Strategic Management, are influenced by the objectives, the products it provides, the existing
processes and the size and structure of the organization. The adoption of Quality Management in the
organization must be an important strategic decision. Applying the principle of continuous
improvement can lead to engaging a consistent approach across the organization for continuous
performance improvement. Quality control (CC) and data quality assurance (CA) procedures are
designed to avoid the introduction of errors in data sets - process called data contamination. There are
two basic types of contamination: addition and omission. CC procedures are effective in reducing added
errors. There are mechanisms applied before the data are obtained and which control the way in which
they are acquired and registered and is mentioned in the book “Quality Management” written by
Oprean et al (2008).

CA procedures are used to detect both omissions and additions after the data have been obtained and
recorded, involving graphical and statistical methods. Data processing methods are used in all stages
of Strategic Management Process: environmental analysis, formulation, implementation, and
evaluation of the strategy and is mentioned in the book “Management in micro and nanotechnologies”
written by Marinescu et al (2005).

3. Advanced Methods of Sustainable Competitive Advantage

The following integrative methods to obtain SCA are applied even in the first stage of the strategic
management process (Figure 1), which begins with external and internal analysis.

3.1. The Customer Matrix

The Customer Matrix is an instrument used to achieve SCA. Different variants of this instruments are
conceived. In this variant, the variables of Customer Matrix are Price and the Perceived Use Value
(PUV) by the customer. The strategic options represent the displacements to the cardinal points (N, S,
E, W) (Figure 2) and is mentioned in the book “Elements of Competitive Strategy” written by Faulkner
et al (2000).

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 Fig. 2. Displacements in the Customer Matrix is mentioned in the book “Elements of Competitive
Strategy” written by Faulkner et al (2000).

Moving to North (N) is the fundamental strategic option. The organization offers the customer a
product at the same price, but with a higher value than that of competing organizations. Shifting the
strategy to the North leads to an imitation reaction from the competition. The strategy adopted in this
case is to focus on a single segment.

Moving to West (W) is the main strategic option. The organization offers the customer a product with
the same value, but at a lower price than that of competing organizations. Shifting the strategy to the
West leads to an imitation reaction from the competition. The organization must always reduce costs
and the adoption of this long-term strategy is difficult to achieve.

Moving to North-West (NW) is the most useful path and involves increasing the value (PUV) while
reducing the perceived price. This strategy is possible when the organization acts in the directions
defined by Michael Porter: cost decrease, and product differentiation by increasing quality. These
directions are based on continuous innovation and is mentioned in the book “Innovation and
Entrepreneurship” written by Drucker (2015).

Moving to South (S) involves reducing the PUV and keeping the price constant.

Moving to East (E) involves increasing the price without the addition of PUV. The strategy can be
profitable in crisis situations of various sectors of activity of innovative organization.

Moving to the South-East (SE) involves increasing the price at the same time as reducing the PUV and
is useful in the short term when it was a quasi-monopoly in a certain sector of activity. The consequence
is a strong damage to the image of innovative organization.

The Perceived Use Value (PUV) can be calculated using the relation:
𝑛
PUV = ∑𝑖 =1 𝑝𝑖 ⋅ 𝑥𝑖𝑟 (1)
where:
xir is the relative value of quality characteristics i
and
pi is the weight of quality characteristic i.

For a best control of given weights pi, they must satisfy the condition:

∑𝑛𝑖=1 𝑝𝑖 = 100% (2)

if pi is expressed as a percentage

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or
∑𝑛𝑖=1 𝑝𝑖 = 1 (3)
if pi <1.

Because the values of quality characteristics xi are expressed in different units of measurement, they
must be converted to relative values. For this, we consider a standard scale at which the value 0
corresponds to the weakest value of parameter ximin, and the value 1, the best value of parameter ximax.

To assign a normed value on the scale 0…1 to an effective value xi, the interpolation relation is used:
𝑥 −𝑥
𝑥𝑖𝑟 = 𝑖 𝑖𝑚𝑖𝑛 (4)
𝑥𝑖𝑚𝑎𝑥 −𝑥𝑖𝑚𝑖𝑛

The construction of Customer Matrix consists in going through the following steps:

Step 1: The elaboration of competitive strategy has as starting point, the identification of market
segments. It is necessary to distinguish whether a particular customer is part of market segment found.
Their assessment is based on the analysis of weights given to the quality characteristics (PUV
dimensions).

Step 2: PUV dimensions are determined by asking customers what quality features they appreciate in
a product. It is recommended to avoid questionnaires that lead to confirmation of Producer’s options.

Step 3: Determining the weights for the PUV dimensions is done by asking customers what most
important quality characteristics are appreciated and how the weights given to each quality
characteristic should be distributed to a product.

Step 4: Determine the PUV, based on the PUV dimensions and weights for own product and
competition. If the input data (xi and pi) are correct, then the performance evaluation should be between
exaggerated levels of optimism and pessimism. In this way, a pro-competitive organizational culture is
formed.

Step 5: Position the products in the Customer Matrix based on the variables: the perceived use value
and the price perceived by the customer. A good way to check is to revalue the Matrix positions with
changes in market share.

Step 6: Adopt specific strategies depending on the position of products in the Customer Matrix. The
main competition takes place in a North-West (NW) direction.

3.2. The Producer Matrix

The Producer Matrix is an instrument for internal environment analyzing of organization in relation to
other competitors from the same industry. Different variants are designed. In this case, the variables of
Producer Matrix are Unit Costs and Efficiency (Figure 3).

Fig. 3. The Producer Matrix variables is mentioned in the book “Elements of

Competitive Strategy” written by Faulkner et al (2000).

The Producer Matrix establishes the relationship between the Unit cost and the competencies of
organization creating the Perceived Use Value (PUV) by the customer.

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There is an indirect link between the Customer Matrix and the Producer Matrix.

The competitive advantage can be obtained because of moving to North-West (NW) in the Customer
Matrix. The organization can only act on the Producer Matrix in two directions reducing costs and
increasing efficiency.

Moving to West (W) in the Producer Matrix by reducing costs can be followed by rising prices, which
involves moving to East (E) in the Customer Matrix.

If the West (W) movement is insignificant, in the Producer Matrix, an insufficient decrease of costs, it
is unlikely that it can be maintained in the Customer Matrix, by reducing the price in conditions of high
competition.

The improvement of competence leads to a shift North (N) in the Producer Matrix, the effect being
moving North (N), South (S) or not at all in the Customer Matrix, depending on the customer reaction
to the quality characteristics of product.

The construction of Producer Matrix consists in going through the stages:

Step 1: For cost analysis is used the value chain of Michael Porter which includes all the processes that
contribute to the construction of product (Figure 4).

Fig. 4. The internal value chain is mentioned in the book “Competitive Advantage” written by
Porter (2003).

Step 2: To define the market segment it is necessary to obtain the agreement of management team on
the market segment to which the product is addressed. The Producer Matrix is elaborated to include
the competencies of market segments on which the organization intends to launch.

Step 3: In order to identify the essential competencies, the question that the management team must
answer is: what are the operating competencies, system, focused on costs that the organization must
have in order to win the market segment, on which it acts.

Step 4: To assess the competencies of organization, the analysis must be extended to the main
competitors in the market segment. The purpose of rating is to place competitors on the Producer
Matrix.

The aggregate note of operating and system competencies is calculated using the relation:
𝑛
Nos = ∑𝑖 =1 𝑝𝑖 ⋅ Cosi (5)
where:
Cosi represents the quota given to the operating or system competency i on a unitary scale,
and
pi is the weight given to the competency i.

For a good control of weights pi granted, they must satisfy the condition:

∑𝑛𝑖=1 𝑝𝑖 = 100% (6)

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The value of aggregate note Nos determines the position of vertical organization with the Efficiency in
the Producer Matrix. To determine the position on the horizontal axis, information on the production
costs of competitors is required. This refers to the profile of competence focused on reducing costs.

This assessment allows the classification of competitors based on external information.

The aggregate grade of cost focused competencies is calculated using the relation:
𝑛
Nfc = ∑𝑖 =1 𝑝𝑖 ⋅ Cfci (7)
where:
Cfci is the share given to competency i focused on costs,
and
pi is the share given to competency i.

For a good control of weights pi granted, they must satisfy the condition:

∑𝑛𝑖=1 𝑝𝑖 = 100% (8)

Step 5: Elaboration of competency Producer Matrix based on the aggregate grades determined in Stage
4 are used to determine the coordinates of competitors. Depending on the position of organization in
the matrix, strategies for improving competence can be developed. The main competition takes place
in the North-West (NW) direction.

3.3. The Risk Cube

The Risk Cube is a complex method that has the advantage of leading to an appropriate decision
strategic of organization development, based on external and internal analyses. Based on the
combinations between Customer and Producer Matrices, are designed different variants. The most
important combination of these previous instruments is the following:

Combination 1: The Customer Matrix has a high PUV and a high price of product. The Producer Matrix
has a high efficiency and a high production cost (Figure 5).

Fig. 5. Combination 1 of the two matrices is mentioned in the book “Strategic

Management” written by Ghiculescu et al (2015).

Combination 2: The Customer Matrix has a low PUV and a high price of product. The Producer Matrix
has low efficiency and low production cost (Figure 6).

Fig. 6. Combination 2 of the two matrices is mentioned in the book “Strategic

Management” written by Ghiculescu et al (2015).

Combination 3: The Customer Matrix has a high PUV and a high price of product. The Producer Matrix
has low efficiency and high production cost (Figure 7).

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 Fig. 7. Combination 3 of the two matrices is mentioned in the book “Strategic
Management” written by Ghiculescu et al (2015).

Combination 4: The Customer Matrix has a low PUV and a low product price. The Producer Matrix
has low efficiency and low production cost (Figure 8).

Fig. 8. Combination 4 of the two matrices is mentioned in the book “Strategic

Management” written by Ghiculescu et al (2015).

Combination 5: The Customer Matrix has a high PUV and a low price of product. The Producer Matrix
has a high efficiency and a low production cost (Figure 9).

Fig. 9. Combination 5 of the two matrices is mentioned in the book “Strategic

Management” written by Ghiculescu et al (2015).

Combination 6: The Customer Matrix has a low PUV and a high price of product. The Producer's
Matrix has low efficiency and high production cost (Figure 10).

Fig. 10. Combination 6 of the two matrices is mentioned in the book “Strategic
Management” written by Ghiculescu et al (2015).

The Risk Cube helps to establish the most appropriate strategy of organization and contains the
following steps:
• the relationship between the product and the market is established,
• determine the requirements of customers in the market,
• the competencies of organization are analyzed.

If they are insufficient, it is established how the gap between the required and the current level can be
covered. The problem can be solved by internal development alliance, or acquisition, each with
different degree of risk. These strategic options are the main variables of cube, the first option being
internal development because it is the least risky.

The second option the alliance involves operating with a partner, over whom the organization has
limited control, so, a higher level of uncertainty.

The third option, the acquisition, is even more risky because it is necessary to harmonize the
competencies of all the organizations involved, a difficult process that can ultimately lead to an overall
imbalance. Risk analysis shows that it grows as the innovative organization moves away from the
markets it operates and the products it makes.

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The first least risky option is to make the same product for the same market, the organization being
based on internal development. If the product is in decline or the market is already saturated, the
other three options with increasing risk are considered:
• launching the same product in a new market,
• making a new product for the same market,
• launching a new product in a new market (Figure 11).

Fig. 11. The Risk Cube variables is mentioned in the book “Elements of Competitive Strategy”
written by Faulkner et al (2000).

The second option is to launch the same product on another market, which involves rebuilding the
Customer's Matrix and that of Producer to meet the new price and quality characteristics of market.

The third option is to make a new product on the same market and only involves the change of Producer
Matrix because the competence for achieving the new value of use perceived by the Customer (PUV)
and the costs of making the new product differ. Considering the restricted resources of the organization,
a gradual strategy is recommended by approaching a risk minimization and is mentioned in the book
“Implanting Strategic Management” written by Ansoff et al (2018).

The fourth option is to launch a new product in another market and will require updating both Customer
and Producer Matrices. These options can be achieved through internal development alliance, or
acquisition in ascending order of risk. In the Risk Cube, these strategic options can be characterized by
a higher level of detail.

For the same product, the same market there is the following additional strategic options:
• keeping the current direction,
• withdrawing from the market,
• concentrating activities,
• increasing the market share.

Maintaining the current direction of innovative organization is a useful strategy if the market share is
high and a Sustainable Competitive Advantage (SCA) has been obtained. The risk increases if the
organization is not attentive to new trends that manifest themselves in the general external environment
and to the evolution of competitive environment and is mentioned in the book “Strategic Management”
written by Barney et al (2012).

Withdrawal from the market is a useful strategy of innovative organization if the market share is small,
external threats is stronger and its competence are reduced. Timely withdrawal of organization is a
useful strategy if losses can be minimized and resources can be leveraged in other markets or in other

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industries. The condition is that the barriers to exit from the market are not high, high expenses and
advance payments are irrecoverable.

Concentrating the activities of innovative organization is the useful strategy in the phases of economic
recession. It implies the consolidation of position in the sectors of activity in which it has a more
favorable position.

The innovative organization withdraws from low-profit activities. The strategies associated with the
concentration are cost decrease based on cost-focused competence and market leadership strategy.

Increasing market share is essential in the maturation phases of a sector of activity. If the industry is in
the launch phase, competitors can evolve quickly and without increasing market share. The strategy is
realized by methods that lead to movement to the North-West (NW) in the Customer Matrix.

The same product strategy, new market is characterized by a higher level of risk. It is necessary to
develop a new Customer Matrix because changing the market involves new requirements related to
PUV size and price. It is necessary to re-evaluate the position of innovative organization in the Producer
Matrix.

New product strategy, the same market is riskier than any of strategic options presented. Even if the
new product addresses the same market, it has different characteristics, requiring a change in the
Customer Matrix. By default, the Producer Matrix must be developed to highlight the competence
needed to make the new product.

The strategy can be applied using the following methods:

Making complementary products, taking over a new product based on a license or franchise, making a
new product through own research and development. The construction of complementary products
presents the lowest level of risk because the strategy is the closest to the current activity. There is a
risk of financing above the allowed limit of new activities in the profitable activity. This risk increases
with the degree of expansion.

The acquisition of a new product based on a license or franchise has the advantage that the product has
been tested on the home market. The product thus no longer requires additional investment in research
and development. The risk is that the new market is different from the original one, and Customers
may have different preferences from those in the home market.

Making a new product through your own research and development is the riskiest strategy. The strategy
is appropriate for organizations with financial, human, informational and material resources.
Innovation competences need to be doubled by operational competence, especially in marketing and
sales activities to capitalize on high Perceived Value Products (PUV).

New product strategy, new market presents the highest risk of strategies presented. If an organization
has a large market share with another product, it can launch a new product in the same market, based
on Customer loyalty to the brand.

Once the strategies have been analyzed and adopted using the Risk Cube, it is necessary to evaluate
and control the strategies by the management team and the staff at the lower levels of innovative
organization using nonconventional technologies.

4. A Case Study
4.1. The Customer Matrix

We have to evaluate the EDM machine made by suppliers from four countries: Japan (JP), Germany
(DE), France (FR) and Romania (RO), using Customer Matrix, relative to the Romanian organization
whose strategy is elaborated in the strategy management process described above.

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The stages of creating the Customer Matrix are:

Step 1: Market segmentation. The product addresses a market segment formed by organizations in
Romania, which use EDM processing for the active surfaces of molds. They are particularly interested
in the precision and high quality of surfaces obtained.

Step 2: Identify the dimensions of PUV.

Users are interested in the following product features:

Overall dimensions:
(01) machine length (L),
(02) machine width (l),
(03) machine height (h),
(04) machine mass (M),

Worktable dimensions:
(05) table length (Lm),
(06) table width (lm),

Working tank dimensions:

(07) tank length (Lc),
(08) tank width of (lc),
(09) tank height (hc),
(10) maximum mass of machined part (mp),

Work races:
(11) X axis travel (X),
(12) Y axis travel (Y),
(13) Z axis travel (Z),

Positioning accuracy:
(14) positioning tolerance on X and Y axes (TpX,Y),
(15) positioning tolerance on Z axis (TpZ),
(16) average positioning dispersion on X and Y axes (6σX,Y),
(17) average positioning dispersion on Z axis (6σZ),
(18) reverse repositioning tolerance on X and Y axes (T-1pX,Y),
(19) reverses reposition tolerance on Z axis (T-1),

Fast forward speeds:

(20) speed of fast advance on X and Y axes (vsX,Y),
(21) speed of fast advance on Z axis (vsZ),

Productivity:
(22) productivity in the materials of copper / steel materials (VW,Cu/st),
(23) productivity in the pair of graphite / steel materials (VW,gr/st),

Minimum Ra roughness of processed surface:

(24) minimum roughness at torque of copper / steel material materials (Ra,Cu/st),
(25) minimum roughness at torque of copper / metal carbide materials (Ra,Cu/MC),

Dielectric unit:
(26) filter fineness (f),
(27) injection pressure of dielectric fluid (pinj),
(28) suction pressure of dielectric fluid (pasp),
(29) coolant temperature (tr),

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EDM generator:
(30) maximum current stage (Imax),
(31) minimum current stage (Imin),
(32) maximum pulse time (timax),
(33) minimum pulse time (timin),
(34) maximum priming voltage (U0max),
(35) minimum priming voltage (U0min).

Step 3: Determining the weights of PUV dimensions.

Weights pi are awarded by a team of potentially qualified users. To reduce the subjectivity in the
weighting, the average values pimed given by the team members were determined. The sum of weights
satisfied the relation (2).

As users are interested in the accuracy and quality of surfaces processed, they have given greater weight
to the characteristics: (14), (15), (16), (17), (18), (19), (24), (25), (26), (31), (33) and lower weights of
characteristics: (01), (02), (03), (04), (05), (06), (07), (08), (09), (10).

Step 4: PUV evaluation of products. The absolute values of xi quality characteristics corresponding to
the four products of companies from Japan (JP), Germany (DE), France (FR), Romania (RO) were
centralized in Table 3.

Depending on the weakest value of parameter ximin and the best value of parameter ximax, for each quality
characteristic relative value was assigned on a normed scale from 0 to 1 based on relation (4).

Using the relation (1) PUV were determined for the products, the resulting values being found on the
last line of Table 3.

Step 5: Determine the positions in the matrix.

The positioning of products in the Customer Matrix based on the two coordinates (Price and PUV) was
represented in Figure 12.

Fig. 12. Customer Matrix for the products

Stage 6: Development of strategy.

The strategy necessary to obtain SCA for the Romanian organization is formulated based on date
provided by Customer Matrix. The market segment to which the product is addressed consists of
organizations from Romania, which do not have high financial resources and are therefore sensitive to
the price variable.

From this point of view, the Romanian product occupies a favorable position in the matrix in relation
to the competitors. The prices of analyzed cars are influenced by the competence related to costs.

In the current conditions related to the global economic crisis, the Romanian organization must
continue to pursue westward movement (continuous cost decrease). In Romania, the costs of

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production factors are relatively low compared to the rest competitors from Japan (JP), Germany (DE)
and France (FR).

The calculation of variables related to Perceived Used Value (PUV) for the analyzed products are
presented in Table 3.

Table 3. PUV evaluation for the products

Nr. Technical JP DE FR RO pimed
Characteristic
xi xir xi xir xi xir xi xir [%]

01 L [mm] 3000 1 3500 0 3200 0.6 3400 0.2 1.5

02 l [mm] 2000 1 2500 0 2400 0.2 2300 0.4 1.5

03 h [mm] 2000 1 2100 0.5 2100 0.5 2200 0 1.5

04 M [kg] 2500 0 3100 1 2700 0.33 2900 0.67 1.5

05 Lm [mm] 600 0 800 1 700 0.5 750 0.75 1.5

06 lm [mm] 350 0 650 1 550 0.67 450 0.33 1.5

07 Lc [mm] 700 0 850 1 750 0.33 810 0.73 1.5

08 lc [mm] 400 0 700 1 600 0.67 480 0.27 1.5

09 hc [mm] 400 0 600 1 400 0 500 0.5 1.5

10 mp [kg] 300 0 450 1 380 0.53 420 0.8 3

11 X [mm] 300 0 450 1 400 0.67 420 0.8 1.5

12 Y [mm] 250 0 400 1 350 0.67 380 0.87 1.5

13 Z [mm] 250 0 400 1 380 0.87 380 0.87 1.5

14 5 1 10 0 10 0 8 0.4 4
TpX,Y [μm]
15 4 1 8 0 6 0.5 6 0.5 4
TpZ [μm]
16 6σX,Y [μm] 2 1 4 0 3 0.5 3 0.5 4

17 6σZ [μm] 2 1 4 0 3 0.5 3 0.5 4

18 -1 3 1 5 0 4 0.5 4 0.5 4
T pX,Y [μm]

19 3 1 5 0 4 0.5 4 0.5 4
T -1
pZ [μm]
20 1500 1 1800 1 1600 0.67 1200 0 1.5
vsX,Y [mm/min]
21 700 0 900 1 800 0.5 800 0.5 1.5
vsZ [mm/min]
22 450 0.67 500 1 400 0.33 350 0 2
VW,Cu/st [mm3/min]
23 3 550 1 550 1 450 0.33 400 0 2
VW, gr/st [mm /min]
24 Ra,Cu/st [μm] 0.05 1 0.1 0.86 0.1 0.86 0.4 0 8

25 Ra,Cu/MC [μm] 0.1 1 0.2 0.86 0.2 0.86 0.8 0 8

26 f [μm] 5 1 10 0 6 0.8 6 0.8 4

27 0.1 1 0.1 1 0.05 0 0.06 0.01 3

pinj [MPa]
28 0.05 1 0.03 0.33 0.02 0 0.02 0 3
pasp [MPa]
29 o 4 1 6 0 6 0 4 1 1
tr [ C]
30 50 0.5 60 1 50 0.5 40 0 3
Imax [A]
31 0.5 0 0.5 0 0.4 0.25 0.1 1 5
Imin [A]
32 1000 0.67 1200 1 800 0.33 600 0 2
timax μs]
33 0.5 0.56 1 0 0.8 0.22 0.1 1 5
timin [μs]
34 200 0.55 250 1 180 0.36 140 0 3
U0max [V]
35 100 0.33 120 0 100 0.33 60 1 3
U0min [V]
TOTAL PUVJP = 68.58 PUVDE = 49.46 PUVFR = 47.24 PUVRO = 41.56 100%

But compared to other competitors in China, which enter the Romanian market in the current conditions
of strong globalization, the organization in Romania is inferior. Therefore, the Romanian organization
must develop other competence focused on reducing costs. In terms of PUV size, the Romanian product
is the lowest rated compared to competitors, so moving north remains the main strategic option.

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In order to ensure efficiency, it is based on the Romanian organization's focus on increasing the quality
characteristics that have been quoted with high weights, which aims to ensure performance on the
accuracy and quality of processing required by users.

As the competition takes place in the North-West (NW) direction, by composing the two movements
mentioned above, the Romanian organization moves to the North-West (NW), aiming to obtain in
perspective of Sustainable Competitive Advantage (SCA).

The Product Matrix could be used further to identify the needed competences for the organization to
effectively improve the position of its product in the Customer Matrix. In this case, it is outward that
Romanian organization must find innovation competition to determine North (N) movement, to be
vectorially combined to West (W) one. Furtherly, these innovation competencies, which are essential
can be found, using Risk Cube instrument.

The strategic alliance between EDM machined manufacturer and a Research Institute and an University
could be the solution gain these competencies, to achieve the technological transfer from an innovated
product to a ready to market one, with improved position in the Customer Matrix.

4.2. The Producer Matrix

With the help of the Producer Matrix, it will be analyzed whether the Romanian organization has the
essential competence necessary to enter the market segment of EDM machines, having the advantage
of low cost at similar performance compared to EDM machines of competitors.

Step 1: The market segment of EDM users consists of organizations, which operate in the field of
injection mold manufacturing. Customers are interested in the accuracy and quality of surfaces
generated by EDM. The financial resources they have are limited and therefore, price and cost are a
success factor in this market segment.

Step 2: To obtain a percentage distribution of costs, the value chain analysis was used (Figure 13).

Fig. 13. Percentage distribution of costs on the internal value chain.

Step 3: The essential competencies required for the market segment to which the EDM machine is
addressed are:
• Operating Competence: Technology (TC), Supplying (SC), Marketing (MK),
• System Competence: Innovation (IC), Quality Assurance (QA), Value Increase (VI),
• Cost Competencies: Coordination and Control (CC), Continuous Cost Decrease (CCD),
Production Factors Cost (PFC), Economies of Scale (ES).

Step 4: Is the rating of core competencies relative to the main competitors in Japan, France, and
Germany, which operate in the approached market segment. (Figure 14 and 15).

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 Fig. 14. Operating and system competence.

The aggregate note of operating and system competencies (Nos) was determined using the relation (5):

Nos = 30%TC + 10%SC + 10%MK + 25%IC+ 20%QA + 5%VI = 0.3 x 0.2 + 0.1 x 0.7 + 0.1 x 0.1 +
0.25 x 0.3 + 0.2 x 0.3 + 0.05 x 0.8 = 0.315.

Fig. 15. Competence focused on costs.

The aggregate grade of cost-focused competencies (Nfc) was determined using the relation (7):

Nfc = 50%CC + 30%CCD + 15%PFC + 5%ES = 0.5 x 0.3 + 0.3 x 0.25 + 0.15 x 0.8 + 0.05 x 0.1 =
0.35.

Step 5: The aggregate scores determined above lead to the establishment of the competitors’ positions
in the Producer Matrix (Figure 16):

Fig. 16. Producer Matrix of competitors

Step 6: In relation to the competing companies, the Romanian organization is better positioned on the
unit costs axis, due to the lower Production Factors Costs (PFC). In the long run, however, that
competence will lose value as labor costs increase.

If it must move West (W), the organization must develop its Coordination and Control (CC) and
Continuous Cost Decrease (CCD). These two competencies focused on costs are addressed, according
to SR EN ISO 9001: 2015 of Quality Management.

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Because customers are interested in the precision and quality of surfaces processed by EDM, the
organization is interested in increasing its efficiency competence and obtaining a perceived use value
as high as possible.

If it is forced to move North (N), the organization must increase its Innovation Competence (IC) with
action and Technology Competence (TC).

By the vectorial composition of the trips, the organization is directed to the North-West (NW), this
representing the direction of the competition.

From the analysis of the value chain, it is observed that the values of administrative and management
expenses are disproportionate compared to those regarding infrastructure and marketing activities.
Resources can be taken from those allocated to management and administrative activities.

For the elaboration of the development strategy of the organization, it is necessary to increase the
weights in the organizational structure, through investments in infrastructure, which affects the
technological competence and through the development of the marketing department, which influences
the economic performances.

4.3. The Risk Cube

The Risk Cube tool is applied for the Romanian organization, which aims to develop through the
manufacture of EDM machines specialized in the field of micro-processing.

With the help of the Customer Matrix, the evaluation of the Romanian organization product compared
to the competitors from Japan (JP), Germany (DE) and France (FR) is performed.

Adding the results from Producer Matrix, we obtained a low PUV and low Efficiency. (Figure 17).

Fig. 17. Combination of Customer and Producer Matrices

If the distance between the Romanian organization and its competitors is large on the axis of
effectiveness, it is necessary to create Alliances with other organizations specialized in the field, which
could increase the Efficiency by adding chiefly innovation competencies. These organizations are
Research Institutes and Universities that achieved results in the research project at laboratory level
(Technology Readiness Level - TRL3).

In the first stage, the Romanian manufacturer will develop The Same product on The Same market,
based on its high value-added competence, which involves modernizing the EDM machines in the
product portfolio, in accordance with current requirements, at low costs and prices.

In the second stage, the Romanian organization will develop new EDM machines for high precision
processing, i.e. The New product on the Same market, e.g. micro-EDM by implementing the results
obtained in the research projects, by ultrasonic assistance of the material removal process, carried out
within the alliances of which it is part (Figure 18).

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 Fig. 18. The Risk Cube Strategic Options

Conclusions
A series of integrated instruments, available for an organization like Customer Matrix, Producer Matrix
and Risk Cube are used to attain and maintain Sustainable Competitive Advantage (SCA).

One can notice that the position of a product in the Customer Matrix, which determines a long-term
profitable position on the market is strongly supported by the competencies provided by Producer
Matrix, and furtherly, the source of these needed competencies could be indicated by using Risk Cube.

The only effective improvement of Customer Matrix position can be done by appropriate
displacements, in the inner of the organization, i.e. within Producer Matrix.

For the presented case study, the Romanian Producer of electrical discharge machines, which has
competencies of series fabrication, the effective solution to obtain the improved position in Customer
Matrix could be a strategic alliance with research institutes and universities with high qualified human
resources and previous innovation results in this very specialized area.

Further research will be dedicated to better integrated the presented instrumented with forecast methods
and applied them effectively for helping organizations to obtain Sustainable Competitive Advantage
(SCA) during a longer time horizon.

Acknowledgement
The results presented in the paper are partially obtained within the PNCDI III project, PED 329/2019.

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