Competitive Advantage: Is DQE the base of competitive advantage

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Competitive AdvantageIs DQE the base of
competitive advantage?

• Prof. Spyros Lioukas, Dr Irini Voudouris
• Athens University of Economics and Business

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Objectives

• Learners will
• Understand the meaning of competitive advantage
• Understand what are the main types of competitive
  advantage
• Identify how competitive advantage may be
  created
• Recognize the basis of sustainable competitive
  advantage
• Distinguish the new bases of competitive
  advantage
• Identify how the DQE approach enhances the
  creation of sustainable competitive advantage

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What is Competitive advantage?

• a basis for the firms long term success?
• a basis for value creation?
• Do we really know where it resides?
• Can it be sustainable?

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What is Competitive advantage?

• When two or more firms compete within the same
  market, one firms possesses a competitive
  advantage over its rivals when it earns a
  persistently higher rate of profit (or has the
  potential to earn a persistently higher rate of
  profit)
• R. M. Grant, 2000

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The main types of Competitive Advantage
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Competitive strategies by Porter
Types of competitive advantage
Low cost
Differentiation
Industry-wide
Differentiation
Cost leadership
Market
Niche
Focus with low cost
Focus with differentiation
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Competitive strategies extending Porter
Types of competitive advantage
Low cost
Differentiation
Industry-wide
Differentiation
Cost Leadership
Hybrid Strategy
Market
Niche
Focus with differentiation
Focus with low cost

• In-between there might be a successful strategy
  (Value for Money)
• Hybrid strategies can be more effective

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Features of competitive strategies

• Cost Leadership
• Efficient scale
• Standardization
• Design for low production cost
• Control of overheads and RD
• Avoid marginal customers

• Differentiation
• Quality
• Innovation
• Design
• Credibility
• Brand name
• Reputation
• Environmental posture
• Customer service
• Integrated services

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Sustainable competitive advantage

• What is meant by sustainable competitive
  advantage?
• Durable
• Valuable to the firm
• Exploiting weaknesses and neutralizing threats
• Unique
• Difficult for competitors to imitate
• Not easily substitutable

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May competitive advantage be sustainable?

• Increased competition leads to decrease of
  differences in competitive advantage
• Standardization/ mass production of unique
  features What can be left for differentiation?
• Unique features of differentiation become
  prerequisites for survival
• Dynamism complexity of the environment

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How can competitive advantage be sustainable?

• The firm must seek competitive advantage in
  combining resources capabilities
• Develop resources and capabilities, which are
  rare, valuable, non-tradable,
• Make those resulting competences sustainable by
  precluding imitation or substitution by
  competitors
• The firm must offer competitive products

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Sustainable competitive advantagebased on
capabilities
J. Kay
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Competitive advantage map
Source Competitiveness Strategies of the best
UK companies, Winning DTI-CBI
Prerequisites
Elements of differentiation
Quality
Quality
Low cost
Low cost
Operational performance
Oper. performance
Delivery time
Delivery time
Creditability
Creditability
Product Service
Product Service
Design
Design
Marketing
Marketing
Customer service
Customer service
Customized product
Customized product
Reputation
Reputation
Innovative product
Innovative product
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Sustainable competitive advantage reflected on
product

• Quality and quality of customer service
• Design
• Innovative product
• Customized product with integrated services
• Environmental friendly

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References

• R.M. Grant, Contemporary Strategy Analysis,
  Blackwell Publishers, 2000.
• M.E. Porter, Competitive Advantage, New York
  Free Press, 1985.
• J. Kay, Foundations of Corporate Success, Oxford
  University Press, 1995.
• G. Johnson, K. Scholes R. Whittington,
  Exploring Corporate Strategy, Prentice Hall, 7th
  eds, 2005
• C. Prahalad G. Hamel, The core competences of
  the corporation, Harvard Business Review, vol.
  28, n.3, may-june, 1990.

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References

• S. Marthur, How firms compete? The Journal of
  General Management, vol.14, no 1, autumn 1988.
• F. Tilley, P. Hooper L. Walley, Sustainability
  and competitiveness Are there mutual advantages
  for SMEs?, in J. Oswald F. Tilley, Competitive
  Advantage in SMEs Organising for innovation and
  change, Wiley, 2003.
• K. Weigelt C. Camerer, (1988), Reputation and
  Corporate Strategy A review of recent theory and
  applications, Strategic Management Journal, 9