Competitive Advantage

Katerina Zacharia

© Katerina Zacharia June 2007

Competitive AdvantageCreates a moat around a business such that

it can keep competitors at bay and reap extraordinary growth and profits

Whitney Tilson, 2000

The way an enterprise determines its positioning in the market in relation to its competitors

© Katerina Zacharia June 2007

Defining Process

1. Identify the company’s core competency Conduct SWOT Analysis What does the enterprise do best?

Ex. Operational excellence Ex. Customization Ex. Price and convenience

© Katerina Zacharia June 2007

Defining Process

2. Research competitive landscape Identify competitors

Conduct competitive analysis

© Katerina Zacharia June 2007

Competitive Analysis

Analyze key variablesProduct mixService offeringsPricingBrand: perception of qualityPackagingDistribution

© Katerina Zacharia June 2007

Defining Process

3. Determine the value proposition Clear statement of the tangible results a

customer gets from using your products or services

Perceived benefits to the customer

The more specific your value proposition is, the better

© Katerina Zacharia June 2007

Defining Process

Identify competitive advantageCan the firm provide a long-term

advantage that is not easily replicated?

© Katerina Zacharia June 2007

Key Point

Value proposition Defined from the customer’s

perspective

Competitive advantage Defined from the firm’s perspective

© Katerina Zacharia June 2007

Guess the value proposition?

© Katerina Zacharia June 2007

Value PropositionWalmart Price

Microsoft Ease of use, accessible

Dell Customization

Coca Cola Brand, taste

Apple Unique products, design, usability

McDonald’s Convenience, consistence

Mercedes Luxury, quality

Starbucks Customization, quality, consistency

© Katerina Zacharia June 2007

Define competitive advantage

© Katerina Zacharia June 2007

Competitive AdvantageWalmart Price/Convenience/Buyer Power

Microsoft Pervasive, Product Offering

Dell Price and Service

Coca Cola Distribution

Apple Product differentiation, innovation Market drivers

McDonald’s Operational Excellence (consistency)

Mercedes Quality

Starbucks Brand and service

© Katerina Zacharia June 2007

Classroom Activity

In groups of 4: List top five favorite music artistsDefine value propositionDetermine competitive advantage