UIUC BADM 350 - Competitive advantage (2 pages)

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BADM 350 Lecture 6 Outline of Current Lecture I Competitive advantage II Primary Components III Secondary Components IV Network Effects V Porter s 5 Forces VI Economies of Scale Current Lecture Sustainable competitive advantage financial performance that consistently outperforms industry averages Resource based view of competitive advantage firms must control exploitable resources Must be 1 Valuable 2 Rare 3 Imperfectly Imitable 4 Non substitutable Does not say which of the four are most important up for discussion The primary components are Inbound logistics getting needed materials and other inputs into the firm from suppliers Operations turning inputs into products or services Outbound logistics delivering products or services to consumers distribution centers retailers or other partners Marketing and sales customer engagement pricing promotion and transaction Support service maintenance and customer support The secondary components are Firm infrastructure functions that support the whole firm including general management planning IS and finance Human resource management recruiting hiring training and development Technology research and development new product and process design Procurement sourcing and purchasing functions These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Fast follower problem when competitors watch a pioneer learn from their successes and missteps then enter the market quickly with a comparable superior product before the first mover can dominate Network effects Metcalfe s Law when a product or service becomes more valuable as more people use it In cases where network effects are strong or a seller s goods are highly differentiated the Internet can strengthen supplier bargaining power Ex The customer base of an antique dealer used to be limited by how many likely purchasers lived within driving distance of a store Now with eBay the dealer can