Chapter 3:

The
Building
Blocks
of
Competitive
Advantage
Building Blocks of Competitive Advantage:
Click icon to add picture

- 4 factors help a Company to build and sustain competitive advantage.

- Considered as generic
- Highly interrelated

1 .
2 3 4
Efficiency Quality Innovation Customer
-
Responsiveness
 Click icon to add picture
EFFICIENCY
Measured by the quantity
of inputs that it takes to
produce a given output.
 Inputs are basic factors of production
such as labor, land capital, management
and technological know-how.
 Outputs are the goods and services that
the business produces.
The simplest measure of efficiency is the
quantity of inputs that it takes to produce
a given output, that is EFFICIENCY=
outputs/inputs
 Employee Productivity- the output
produced per employee
 Click icon to add picture
QUALITY
A product can be thought
of as a bundle of attributes.
The Attributes of many
physical product include
their forms, features,
performance, durability,
reliability, style and design.
Super quality-when a customers
perceive that its attributes provide them
with higher utility than the attributes
products sold by rivals.
Quality as excellence- Product’s design
and styling,it’s aesthetic appeal, features,
function and level of service associated
with its delivery.
Quality as Reliability- Occurs when a
product consistently performs the
functions it was designed for, and
seldomly breaks down.
 Click icon to add picture

Product innovation: Development of a

INNOVATION
Innovation refers to the act of
creating new products or
processes, There are two main
types of innovation
new to the world or products that are
new to the world or have superior
attributes to existing products.
Process innovation: Development of a
new process for producing products and
delivering them to customers
 Click icon to add picture

Superior responsiveness- achieved by

identifying and satisfying customer
needs better than one’s rival
CUSTOMER
RESPONSIVENESS Customer response time- Time that it
takes for a good to be delivered or as
Customer responsiveness will
help to please customers and service to be performed.
ensure they purchase from you
again and again.
Chapter 3:

Business
Models, The
Value Chain,
and Generic
Distinctive
Competencies
Business Models, The Value Chain, and Generic Click icon to add picture
Distinctive Competencies

Business Model represent the way in which managers configure the value chain
of the firm through strategy, as well as the investment they make to support that
configuration, so that they can build the distinctive competencies necessary to
attain the efficiency, quality, innovation, and customer’s responsiveness.

-
 WALMART VS NORDSTORM Click icon to add picture

WALMART NORDSTORM
-GOAL IS TO LOWEST COST -BEST COST PROVIDER-PROVIDE GOOD
OPERATOR SELECTION OF HIGH QUALITY AND
VALUE MERCHANDISE WITH
-LOWER COST BUT PROVIDE
EXCELLENCE SERVICE.
HIGHER VOLUME
-HIGH PRICE CLOTHING AND APPAREL
-LOW PRICE GOODS
-INVEST MORE IN FURNISHING AND
-WAREHOUSE FEEL STORES
. FITTINGS STORE

-
Competitive Advantage and the value Creation Cycle