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B3_Internal Analysis and Competitive Advantage, G5 (林奧都 - Aldo, 廖莉琪 -…
B3_Internal Analysis and Competitive Advantage
strategic management
continue to create value
create competitive advantage
once very valuable are no longer so
create isolating mechanisms to barriers the competitive company
complexity
tacit knowledge
time compression diseconomies
property rights
create a competitive
advantage for a company
imitation
replication
different product development processes but achieve similar results.
example : Apple
trademarks that
cover its brands and logos
copyrights over software and other creative content
property rights that matter are mostly over intangibles
patents on its various technologie
Apple created a system that make other competitive compony not easy to mimic because the cost of being copy is high
Competitive Advantage and Firm Performance
Southwest Airlines
averaged net margins of 5.8%
stock has had cumulative return of 4000%
double! - the return on the S&P500 index
could not find a single other major airline that had not declared bankruptcy at least once
Real Madrid and Barcelona
the top two soccer clubs in the world in valuation ,both in the Spanish La Liga
which as a league is far behind the Premier League in overall revenues and profits
some businesses do really well even when they are in poorly performing industries
the recipe for high performance
sustaining a competitive advantage
competitive advantage
able to outperform its competition
some set of rivals of the firm operating in the same industry
industry average competitors
the firm's performance
better performance
accounting profit
accounting data are regularly collected and readily available for many firms
the performance data tend to be back looking
the company's market stock
the financial market should incorporate the future prospects
might not incorporate tacit internal information
the net value of company
projecting out future free cash flows
question of management of company
EVA
the difference between the value generated and costs incurred
difficult to make sure that how much value is being created
sustained competitive advantage
must be to develop and sustain a competitive advantage over time
two key questions
heterogeneity
sustaining a competitive advantage
company effects are a much more important :star:
can predicting nearly 80% of the explained the differences in performances
some companies consistently outperform others even in the same industry
industry and company effects together predict nearly 50% of profit performance
Sources of Competitive Advantage
Activities
Two Solutions
Value Network
important sets of activities and their relationship with each other
typical service industries
important thing
not arranged in any sequential value chain
all of them are still related to each other to a lesser of greater degree
Value Chain
focuses on 5 primary activities
inbound logistics
outbond logistics
operations
marketing and sales
1 more item...
supported by a set of support activities
Research and development
human resource management
procurement and cooperate infrastructure
full range of activities needed to create a product or service
typical manufacturing firms
Differences
Value network are less generic in the sub categories of activities used
and how they are connected to each other
Value network is much more customized
divide the activities into groups
figure out ways to illustrate
the relationships between activities
Companies Performance
Activities
" to undertake "
bigger company, more activities
Resources
specific assets
Aggregate concept , Big digits define the companies successful
Capabilities
firm's ability/ firm's potential
ex: great customer service, innovative product design, low cost inventory management
result of a combination between Resources and Capabilities
Resources
tangible
resources that are physical and you could touch
financial resources
cash
physical resources
machines
inventory
intangible
resources that are not physical and you cannot touch
technological
design&plans
relational
customer relationship
human capital
skills
which resources matter most?
greatest ability = produce economic value.
Resources that are valueable are hard to get
rivals did not have.
Intangible goods are considered much more important
Capabilities
Definition:
" the capability to perform a particular activity in a reliable and at least minimally satisfactory manner"
Results from learning, encoded in organizational routines.
Need not map to a functional area.
Entail deploying, combining and linking resources.
Summarization
Ways of analyzing the sources of competitive advantage
resources
a blended approach
capabilities
activies
Generate a competitive advantage
Valuable
if Only
competitive parity
Rare
heterogeneity
History
Path dependence
Managerial foresight
Luck
Sustained Competitive Advantage
VRI
Rare
Inimitable
Valuable
Durability
Leaky bucket
close the leak
continue adding water
Relevance
Constant change of environment
Able to change source
Conclusion
Competitive Advantage is important
VRI
Overcome challenges
Imitation and replication
Stay durable and relevant
G5
林奧都 - Aldo
廖莉琪 - Angela
陳威霖 - Willie
劉津綝 - Alice
甄㛩媄 - Yvonne
林美娜 - Hana
黃子芸 - Delia