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Sustainable Competitive Advantages, G2 (DICE4 Becky, DFLL3 Keely, DFLL4…
Sustainable Competitive Advantages
The base
Toyota vs. General Motors
Toyota creates more Utility / Value
Cost Structure
Higher
Lower
Price charged
Higher
Lower
—Toyota is more profitable
Interfirm differences in profitability
Firm Effects
Business Units
Corporate Effects
Industry Structure
Based
Competitive Behavior
Basic framework for strategy analysis
Internal
''Who am I in this world?''
The Firm
Structures
Systems
Long-term Goals
Resourses
Capabilities
External
"How's the world composed of?''
The Industry
Customers
Competitors
Suppliers
Company internal resources
Why RBV becomes critical?
Unique perspective
Importances of internal resources and capabilities
The primary sources of profitability :moneybag:
Resource heterogeneity
The firm's individual resources
Make each company different
Competitive advantage
Resource immobility
Stickiness
A barrier prevents imitation
eg: brand equity
Resource-Based View
Theoretical premise hypothesis
Enterprise = A collection of resources
Tangible / Intangible resources
External environment change
Formulate strategies based on resources
:check: Every company has different strategic resources.
:check: Strategic resources are difficult to imitate
Construction of competitiveness
Make your company...
:three: Inimitable
Path dependency
Causal ambiguity、Social Complexity
The complex daily activities of enterprises are difficult to know what to imitate and what not to imitate.
High cost of imitation ( time / money )
Over time, the environment has changed, and advantageous resources no longer have advantages.
Benefits do not necessarily outweigh costs.
Physical uniqueness
Time cannot be turned back. The environment that contributed to the success of the company is no longer there.
:four: Nonsubstituable
:one: Valuable
:two: Rare
Organizational capabilities
Inter-organizational
Intra-organizational
Strategy
Competitive advantage
Hierarchy of Capabilities
:three: Initiative
:four: Expertise
:arrow_up_small:
:arrow_up_small:
:two: Creativity
:arrow_up_small:
:arrow_up_small:
:five: Diligence
:arrow_up_small:
Leaders can expect and command
:one: Daring
Leaders cannot command
:six: Obedience
The larger the company, the more levels in the pyramid
What conditions bring out the highest and best use of talent?
The further up people go, the more contribution can make
Flatter organizations
Every employee is on the same level
Individual basis
Appraising resources
Intangible resource(Intellectual capital)
Technology resources
Patent, copyrights, know how, R&D facilities
and technical and scientific employees
eg: No. of patents owned, royalty income. R&D expenditure and R&D staff
Reputation resources
Brands, customer loyalty
and company reputation
eg: Brand equity, customer retention
and supplier loyalty
:star: The key to success
Human resources
Training, experience, adaptability, commitment
and loyalty of employees
eg: Employee qualifications, pay rates, turnover
Tangible resources
Physical resouces
Plant and equipment, land and buildings and raw materials
eg: Market value of fixed assets, scale of plants and alternative uses for fixed assets
Financial resources
Borrowing capacity, internal funds generation
eg: Debt/Equity ratio, Credit rating and net cash flow
Core competences & Competitive advantages
Competitive Advantages
2️⃣
Zone of Irrelevance
Strategic Importance
Low
Relative Strength
Low
4️⃣
Key Strengths
Strategic Importance
High
Relative Strength
High
1️⃣
Superfluous Strengths
Strategic Importance
Low
Relative Strength
High
3️⃣
Key Weaknesses
Strategic Importance
High
Relative Strength
Low
As Sources of Profit
The profitability is to take advantage of differences
Own strengths
Knowledge Based View (KBV)
➀ Knowledge creation
➁
Continuous innovation
➂ Competitive advantage
Knowledge Conversion by Nonaka
2️⃣ Socialization T to T ⬇️
Creation Sharing
3️⃣ Externalization T to E ⬇️
Acquisition Identification
4️⃣ Combination E to E ⬇️
Integration
1️⃣ Internalization E to T ⬇️
Storage
T
acit Knowledge
Difficult to describe accurately in words and difficult to formalize
Others cannot teach you directly, so you have to learn it yourself
E
xplicit Knowledge
Can be clearly expressed, recorded, easily disseminated, and shared
K-Generation = Exploration → creation, acquisition
Only 2️⃣ and 3️⃣
K-Application = Exploitation → replication, sharing, integration, storage, and identification, measurement, etc.
Including 1️⃣ to 4️⃣
Based on the possession of resources and capabilities
eg.Ducati Motor: Motorbike industry
Definition
How to reduce costs or create differentiation or satisfy specific customers
Be more competitive
Distinctive competences
or
Core competences
Defining strength
Advantages
Difficult to imitate
Enhance the marketability of a product
Disadvantages
Require large time or capital requirements
Reduce the overall flexibility
Amazon
Be Earth's most customer-centric company
Corporate Analysis
Business Model Canvas
V
alue
P
roposition
K
ey
R
esources
K
ey
P
artners
Those who play an important part in supporting you to create and deliver your VP
C
ost
S
tructure
Operating costs and expenses of your business model
Assets that are indispensable in your business model
K
ey
A
ctivities
Activities that help you perform your VP
C
ustomer
R
elationships
C
ustomer
S
egments
(
T
arget
A
udience)
Who you create value for
How you establish and retain the relationship between you and your customer base
Engagement intensity
e.g. Purchase frequency, loyalty, ...
Ch
annels
R
evenue
S
treams
How a company generates revenues from its business model
Primary income & secondary income
Touch points you interact with your customers
Products / services you provide to solve customers' problems
Porter's (Corporate) Value Chain
of a Firm
Support (Secondary) activities
Technology development
Human Resource Management
Procurement
Finding vendors and negotiating best prices
Firm infrastructure
Net Margin = Gross margin -
Expense
e.g. Accounting, legal, administrative, and general management.
Support the primary activities
Primary Activities
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Service
Gross Margin = Revenue -
Cost
Deliver products or services to customers
Outsourcing
Receiving storing and handling of raw material inputs
Physical creation, sale, and support of a product or service
Value System
:two:
Value Creation
(Value Delivery)
The
entire
process a company goes through to create something valuable to their customers
:three:
Value Appropriation
How a company claims its share of the value it generates
:one:
Value Proposition
How your products / services benefits / solve customers' problems better than your competitors
:four:
Value Sustainability
How can long term value creation be maintained
Hard to imitate or irreplaceable
G2
DICE4 Becky
DFLL3 Keely
DFLL4 Cathy
IBS3 Lizzie
IPCM3 Vivian
DSEAS3 Dora
DFLL3 Tina
IBS3 Cyndy
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
Strategic Importance
Low
/0
High
/10
Relative Strength
Low
/0
High
/10
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
🌀
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎ ︎
Charge less on price—
Value-Price
Price -Cost
COST
↓ For better understand, I make the bigger one ↓
VALUE
PRICE
Tacit Knowledge
Explicit Knowledge
Explicit Knowledge
Explicit Knowledge
Tacit Knowledge
Tacit Knowledge
:arrow_down:
Indirectly
related to output
Selling, general and administrative expenses
:arrow_down:
Directly
related to output
Material and labor costs
Corporate Strategy / Business strategy
Outcome
What else does Toyota perform?
GM has a less Value
while having a higher cost
TOYOTA
General Motors
COST
Industry key success factors
Resources
🔽
🔽
Expectation
1️⃣
Superfluous Strengths
2️⃣
Zone of Irrelevance
3️⃣
Key Weaknesses
4️⃣
Key Strengths
Location
Proprietary technology
New product development
Engineering
Marketing
Brand
Design
Customer
Service
Finance
Distribution
Manufacturing
2️⃣ Socialization
1️⃣ Internalization
4️⃣ Combination
3️⃣ Externalization
Resources :heavy_plus_sign: Capabilities
