Chapter 2 Strategy Technology Concepts Frameworks for Understanding What Separates Winner From Losers I Introduction sustainable competitive advantage financial performance that consistently outperforms industry averages operational effectiveness performing the same tasks better than rivals perform them fast follower problem exists when savvy rivals watch a pioneer s efforts learn from their successes then enter the market quickly with a comparable product at a lower cost strategic positioning performing different tasks than rivals or the same tasks in a different way inventory turns number of times inventory is sold during the course of a year straddling attempts to occupy more than one position while failing to match the benefits of a more efficient rival resource based view of competitive advantage if a firm is to maintain sustainable competitive advantage it must control an exploitable resource that have 4 critical characteristics resources must be o valuable rare imperfectly imitable non substitutable dense wave division multiplexing technology that increases the transmission capacity of fiber optic cable II Powerful Resources imitation resistant value chain way of doing business that competitors struggle to replicate and that frequently involves technology in a key enabling role value chain set of activities through which a product service is created and delivered to customers brand symbolic embodiment of all the info connected with a product service viral marketing leveraging consumes to promote a product service scale advantages advantages related to size economies of scale when costs can be spread across increasing units of production switching costs cost a consumer incurs when moving from one product to another netowkr effects when the value of a product increases as its number of uses expands distribution channels path through which products get to customers affiliates third parties that promote a product in exchange for a cut of sales III Key Framework 5 Forces of Industry Competitive Advantage Porter s 5 Forces 1 intensity of rivalry among existing competitors 2 threat of new entrants 3 threat of substitute goods 4 bargaining power of buyers 5 bargaining power of suppliers Price transparency degree to which complete info is available Information asymmetry decision situation where one party has more in than its counterpart
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