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STRATEGY Where to Play How to Win, DEFINING STRATEGY, RESOURCES what a…

- - - - Capabilities that are valuable, rare, costly to imitate, and non-substitutable are core competencies
    - - CORE COMPETENCIES
        skills or experience in an activity
        
        Core Competencies are activities the firm performs particularly well
        
        Adds value to goods & services over a long period of time
        
        To sustain competitive advantage, a firm must have 3-4 core competencies, but not more
        
        CREATING VALUE
        measured by customers WTP
        
        4 CRITERIA OF SUSTAINABLE ADVANTAGE
        
        VALUABLE
        
        RARE
        
        COSTLY TO IMITATE
        
        NON-SUBSTITUTABLE
        
        INTERNAL VALUE CHAIN ANALYSIS
        
        Internal Analysis
        what you can do
        
        External Analysis
        might choose to do
        
        To be a source of competitive advantage, a resource or capability must allow the firm:
        
        To perform an activity in a manner superior to the way competitors perform it; OR
        
        To perform a value creating activity that competitors cannot perform
        
        Value creating activities
        are those that transform raw materials to finished goods e.g. drilling, welding etc.
        Only under these conditions does a firm create value for customers and have opportunities to capture that value
        
        OUTSOURCING
        
        Purchase of a value creating activity. Note outsourcing does not work without extensive internal capabilities
        
        Customer value is the source of a firm's potential to earn above average returns
        
        Value is created by low cost & differentiation
        
        SUSTAINABLE COMPETITIVE ADVANTAGE
        
        Value creation results when the firm satisfies the operational efficiency demands of its external environment while simultaneously using its own unique capabilities to establish a viable strategic position
        
        INNOVATION
        key to longterm viability
        
        Good innovation should grow the pie
        
        Core Innovation
        incremental changes to existing product and incremental inroads to new markets
        draw on assets the company already has
        
        Adjacent Innovation
        leveraging something the company does well into a new space.
        Draw on existing capabilities but put them to new uses
        
        2 more items...
        
        Consider the importance of truly understanding what your competitive advantage is
        
        balanced insights come from behaviours, not just market intelligence
        
        Innovation is a discipline not an art