CHAPTER NINE
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Transcript of CHAPTER NINE
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© 2000 South-Western College Publishing
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CHAPTER NINE
CREATING A COMPETITIVE ADVANTAGE USING
COMPETITIVE INTELLIGENCE
Prepared by Jack Gifford
Miami University (Ohio)
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© 2000 South-Western College Publishing
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COMPETITIVE ADVANTAGE
Also called a differential advantage
A set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition
This tennis racket has the largest sweet spot and longest shaft in the industry!
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COMPETITIVE ADVANTAGE
THREE TYPES OF COMPETITIVE ADVANTAGECost leadershipProduct or service differentiationNiche strategies
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COMPETITIVE ADVANTAGESources of Cost Differential Advantages
Experience curvesEfficient laborNo frills goods and servicesGovernment subsidiesProduct designReengineeringProduction innovationNew methods of service delivery
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COMPETITIVE ADVANTAGESources of Cost Differential Advantages
Experience curves Efficient labor No frills goods and services Government subsidies Product design Reengineering Production innovation New methods of service
delivery
• Declining costs due to economies of scale
•Learning by doing
•Technological advances
•More accurate forecasting models
CO
STS
TIME
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COMPETITIVE ADVANTAGESources of Cost Differential Advantages
Experience curves Efficient labor No frills goods and services Government subsidies Product design Reengineering Production innovation New methods of service
delivery
•Pools of cheap labor•Off shore sourcing•Outsourcing•Use of temporary labor
•Reduce options
•Southwest Airlines
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COMPETITIVE ADVANTAGESources of Cost Differential Advantages
Experience curves Efficient labor No frills goods and services Government subsidies Product design Reengineering Production innovation New methods of service
delivery
• Governmental financial assistance
•Reverse engineering•Cutting edge engineering technology
•Downsizing by layoffs of employees•Pruning product lines•Closing factories•Renegotiating contracts
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COMPETITIVE ADVANTAGESources of Cost Differential Advantages
Experience curves Efficient labor No frills goods and
services Government subsidies Product design Reengineering Production innovation New methods of service
delivery
•Simplified production techniques
•New technology, CAD/CAM and robotics
•EXAMPLES
•out-patient surgery
•walk-in clinics
•ticketless travel
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COMPETITIVE ADVANTAGESources of Cost Differential Advantages
UNFORTUNATELY:Cost competitive advantages are rarely sustainable,
because…Competitors copy your low cost structureTransferable technologyLower costs from alternative suppliersAcquisitions and mergers
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COMPETITIVE ADVANTAGEProduct or Service differentiation
Common differential advantages include…Brand namesStrong dealer networkProduct reliabilityImageService levelValue impressions (packaging, shape,
personnel, slogans, etc. )Augmented products
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Seeks to target and effectively serve a single segment of the marketMay be a niche overlooked by competitorsMay be a niche too small for a competitor to
effectively serveMay have a unique advantage that allows one
company to serve the niche better than others; for example geographic proximity for a low value, high weight product (cement)
COMPETITIVE ADVANTAGENiche Competition Advantage
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COMPETITIVE INTELLIGENCE
Competitive intelligence is the creation of a system that helps managers assess their competitors and their vendors in order to become a more efficient and effective competitorIntelligence is analyzed information
Environmental Scanning
Competitive Intelligence
+ Marketing Intelligence
Part of...
DecisionSupportSystem
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COMPETITIVE INTELLIGENCE
Functions of competitive intelligence include…Help identify a competitor’s competitive
advantageFewer surprisesPredict changes in relationshipsIdentify marketplace opportunitiesGuard against threatsForecast competitor’s strategiesDiscover potential new competitorsLearn about new technologies, government
regulations
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SOURCES OF INTERNAL COMPETITIVE INTELLIGENCE
Sales personnel, through observation or communication with customers and vendors Formal reports & informal feedback
Competitive Intelligence Audit (CIA) Employees from all areas Independent databases Marketing research studies Warranty cards and back order reports Returned merchandise forms Repair records and customer order forms Inquiries stimulated by promotions
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Experts, such as... •Editors
•Writers
•Reporters
•Functional experts
•Educators
•Authors
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
CI consultants, such as...
• One main source can be identified at http://www.scip.org the home page for the Society of Competitive Intelligence Professionals
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Government agencies, such as...
•OSHA
•EPA
•FCC
•FDA
•SEC
Freedom ofInformation
Act
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Uniform Commercial Code FilingsIdentify goods that are
leased or pledged as collateral to banks or other lending institutions
• Learn of additions of plant assets
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Suppliers Competitors volume,
new product launch dates, test markets, delivery dates, inventory levels
Non-disclosure agreements
Photographs
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Newspapers and other publications Newspaper clipping services Industry and association directories Announcements
Yellow pages Location & number of competitors Industry size Product line information
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Trade shows New product introductions Sales literature Pricing information New technology Industry trends Industry seminars Compare competitor’s offerings
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NON-COMPUTER-BASED EXTERNAL SOURCES OF COMPETITIVE INTELLIGENCE
Speeches by competitors Financial community Employees Trade associations
Neighbors to competitors Visit a local pub or restaurant and talk
to employees
Advisory boards Broad or very specific Internal or external
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USING THE INTERNET AND DATABASES FOR COMPETITIVE INTELLIGENCE
CI researchers can use the Internet and databases to answer these and other similar questions: What articles were written about this market? What companies are associated with the product group? What patents have been filed for this technology? What
are the major publications in this industry? Industry statistics and events? List of leading experts in the industry? Can obtain both domestic and global data. Databases can be acquired over the Internet or on CD-
ROMS
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INDUSTRIAL ESPIONAGE
Industrial espionage is an attempt to learn a competitor’s trade secrets by illegal or unethical means Theft Hiring away key
employees Listening devices or
communications intercept Video surveillance
Economic Espionage Act of 1996