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Sustained Competitive Advantage, resource or capability, Against…
Sustained Competitive Advantage
Lesson3,Slide 4
Complexity
Which activities are being used.
How they are implemented.
Diversity of Activities
potential combinations
Built-in Imitation Barrier
Difficult for other companies to replicate.
Consideration for Strategic Managers
internal analysis
Take actions to address barriers.
Lesson 3, Slide 3
Isolating mechanisms
Tacit knowledge
It is not easily explained or transferred.
Time compression diseconomies
The problem of time consuming process of resource imitation.
Complexity
Copying becomes difficult and make major errors easily.
Property rights
It can effectively prevent imitation and copying.
Causal ambiguity
It is difficult for competitors to copy success.
Method
Luring Away Key Resources
Measures to prevent valuable resources from easily moving to competitors.
Legal rights that provide exclusive control over resources and prevent imitation.
Attracting and acquiring important resources that competitors value.
Example
Apple
Aggressiveness
Ineffectiveness
Barriers are not foolproof in preventing competition.
Goal
Lesson3,Slide 6
Durability
Durability and Relevance Concerns
Managers focus on sustaining competitive advantage.
Reflects the dynamic and challenging business environment.
Activity Systems, Resources, and Capabilities
Metaphor: Leaky Bucket
Company = Bucket
Competitive Advantage = Water
Challenges to Durability
Resources degrade over time
Routines and activities may be lost.
Key employees and partners may leave.
Capabilities may deteriorate.
Solutions to the Durability Challenge
Plug the leaks
Preserve resources
Maintain activity systems
Retain key personnel and partners
Continuous replenishment
New hires to replace lost talent
Training and managerial intervention to strengthen capabilities
Challenge of Relevance
The biggest one
Environment
:check: Existing sources of competitive advantage
Now
Dynamic and constantly changing
:red_cross: Useful
In the future
Core Competences
Helped the company succeed
in the past
Facing the changing of Environment
Not willing to change / Find it difficult to abandon
Still rely on them
Core rigidities
No longer valuable
Get in the way of acquiring or building new relevant competences
1 more item...
In the past
Responding
Are capable of changing their sources of competitive advantage
Dynamic capabilities
Lesson3,Slide 7
competitive advantage
firm-effects
:star:
analyzing
resources
create economic value
capabilities
activities
potential challenges
continue create economic value
ensure resources
maintaining resources
imitation
replication
Lesson3, Slide2
Four potential challenges
Replication
Apple's capability to develop cool new product
threat
Different process achieving similar results
Figure out and implement Apple's product
to be durable
Continue to create value
Apple pivots away from iPhone and Apple Watch, towards Apple Tv or electric car
Imitation
not degrade or erode
Achieving sustained competitive advantage
Prevent & Ensure
Lesson3,Slide 5
VRI framework
a framework for analyzing competitive advantage
developed by Professor Barney and other scholars
VRI framework
capabilities
firm’s resources
ability to realize a sustained competitive advantage
V-R-I
valuable
temporary competitive advantage
rare
sustained competitive
advantage
inimitable
:warning:
durability or relevance of the source is very little in VRI framework
resource based view ( RBV )
The analysis of resources as the basis of competitive advantage
most of the field of strategic management
the sustainability of competitive advantage
emphasize isolating mechanisms
resource or capability
Against competitors like Samsung and HTC
Raise costs for competitors to imitate or replicate the competitive advantage.