Advanced Corporate Strategy

ST104x

How is corporate advantage different from competitive advantage

Professor Sai: Is corporate advantage an extension of competitive advantage?

Professor Srinivasan: In a sense, yes. Competitive advantage is conceptualized as an outcome

of the fit between firm resources and the industry key success factors. If the firm did well on
the parameters that represent the industry key success factors, the firm would have
competitive advantage.

Corporate advantage, on the other hand is about the fit between resources across businesses.
In the context of a multi-business firm, corporate advantage is about how the firm is able to
leverage and organize its resources.

Professor Sai: So, what if the firm had corporate advantage?

Professor Srinivasan: Corporate advantage helps firm in three ways.

I. One, it forms the basis of the definition of scope. For instance, a firm with specific
resources would have limited product scope, whereas firms with generic resources
would be able to have a broader scope.

Professor Sai: For example, a firm with an industry-specific competence like water
purification technology would leverage its resource in businesses and markets that
value water purification, like municipal water treatment and home consumer products
such as; home water purifiers. On the other hand, a firm with direct marketing
competence would be able to diversify into a larger number of industries where direct
marketing could be leveraged.

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 Advanced Corporate Strategy

ST104x

II. Professor Srinivasan: Exactly. Secondly, corporate advantage is an indication of

control and coordination of activities in each of its businesses, leading to competitive
advantage in every businesses.

III. And thirdly, corporate advantage is about how the firm synergizes its resources across
businesses.

Professor Sai: So, the synergies we speak here are about, how the resources are related?

Professor Srinivasan: Yes, and it is not about product-market relatedness. That could be the
outcome of related resources.

© All Rights Reserved, Indian Institute of Management Bangalore