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Installment 9: STRATEGIC POSITIONING - Coggle Diagram
Installment 9: STRATEGIC POSITIONING
Competitive Advantage
Create more value than the rival
Willingness to Pay
How much :silhouette: is willing to pay :question:
Intangible
Depends on preferences & utility
Consumer Surplus
Willingness to pay -- Perceived Value
B (Willing to pay) $5, you pay $3, Surplus = 2
CS Parity when firms offer the same amount
Produce goods with more positive C. Surplus
Value Chain
Firm create value as the goods move along VC
Sequence of value-creating steps
Activities
Primary
Production
Logistics
Marketing/sales
Support
Infraestructure
Value Created
Economic Value
Producer combines inputs to make a product B>C
VC = B - C
VC = (B-P) + (P-C)
Consumer Surplus + Producer Surplus
P.S = P -C
C.S = B - P
Ways to create value
Set a different value chain to create more value
Set same value chain and perform activities more effectively
Resources - firm specific
Capabilities
Valuable across products/markets
Persist over :silhouette:
Tacit
Activities especially well done
Generic Strategies
Tells how the firm positions itself to compete
Cost Leadership
Larger Value created focusing on
COST
Benefit Parity
Same B & Lower C
Benefit Proximity
Small-lower B & very lower cost
Qualitatively different product
Re-defining category
Set Price just below the Unit cost of the rival
Benefit Leadership
Larger Value created focusing on
Perceived Value
Benefit Parity
Same cost & higher P.Value
Cost Proximity
Small-higher cost & markedly higher P.Value
Markedly higher costs & P.Value
Price Premium
Set Price = unit cost + (P.value of leader - P.value of the next rival)
Focus
Product specialization
Limited set of product for wide class of :silhouette:
Customer specialization
Related products to limited :silhouette:
Allows economies of scale
Geographic specialization
Related products within a market
Insulate from competition
Broad Coverage
Serve all customer with full line of products
Economies of scope
Resource-Based View
Focus on Strengths & Weaknesses
Firms compete with their resources
Resources enable
Better product
Meet customers needs
Create more value
Types of Resources
Tangible
Physical Capital Resources
Technolgy
Equipment
Financial
Intangible
Human Capital Resources
Experience
Skills & Knowledge
Organizational Capital Resources
Coordination systems
Controls
Property Based
Legally defined property rights
Use of labor, materials, etc.
Protected by contracts & patents.
Knowledge Based
Technical expertise
Relationships
Not protected
Resource
Anything that can be STRENGTH
Assumptions
Heterogeneity
Every firm has their own resources
Rare & Non-substitutable
Immobility
Not mobile across firms
Competitive advantage
Rivals unable to duplicate
Can be sustained over time
VRIN
Valuable
Help to create value
Improve efficiency or effectiveness
Help create or implement strategies
Rare
Hard to access
Inimitable
Hard or expensive
Non-substitutable
Cannot be replaced
Organizational competencies
Cognitive processes
Tangible & intangible understood & translated into action
Disadvantages
Assumes Managers have control
Resources are neither necessary nor sufficient