Competitive Advantage Flashcards
(21 cards)
Comp advantage frameworks
VRIN
Consistency
Game theory
Capabilities - purpose
Allows firm to drive bigger wedge between benefits and costs (increase WTP or reduce costs)
Porter’s Generic Strategies
2 dimensions:
- Scope of competition (broad vs narrow)
- Comp advantage (price vs qual)
3 strats:
- Cost leadership Strat
- Differentiation Strat
- Focus Strat
Cost leadership Strat (characteristics)
Goal: significant cost gap over comp
- acceptable quality at lowest cost
- Econs of scale to lower op exp
Differentiation Strat (characteristics)
Goal: significant price gap over comp
- superior quality above avg prices
- selectively incur costs to create quality
Focused differentiation (pros and cons)
Pros:
- finely tuned to cust needs
- higher WTP
- focus itself is barrier to bigger players
Cons:
- higher avg costs (FC spread across low volume)
- can’t expand easily outside niche
- small portfolio means mistakes/external changes pose big risks
Consistency Strat check
- Internal: are ops/sys consistent with Strat? (Value prop, capabilities, cost structure, revenue streams, customers, channels)
- External: is Strat consistent with how others might respond?
- Dynamic: is Strat consistent with keeping a long-term advantage?
Internal consistency - analysis tools
- Biz model canvas
- Value chain
- Activity map
Biz model canvas
Value chain
- overarching activities on top
- prod and sales ops are listed in columns
Activity map
VRIN
Valuable (reduce cost/increase WTP)
Rare (not possessed by rivals)
Inimitable (difficult to copy)
Non-substitutable (can’t do same thing in different ways)
Game theory def
Study (using math models) of conflict and cooperation between intelligent rational decision makers
Game forms
Normal (table)
Extensive (tree diagram)
Nash equilibrium
No player gains more by changing their strategy
Dominant Strat
Earns focal player the largest payoff no matter what other player does
Other game theory concepts
Backward induction
Credible threat
Mixed Strat
Duopoly comp game
Cournot - right quant to produce
Bertrand - right price to set
Repeated games
Improves equilibrium (value in future coop)
Tit-for-tat
Once end is know behavior goes back to single period game)
Competitor analysis for game theory
How all of these interrelate
- behavior
- goals
- capabilities
- assumptions
Comp advantage cases
Ducati
Hurtigruten
Ryanair
