competitive advantage – resources and capabilities

7/27/2019 Competitive Advantage – Resources and Capabilities

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Competitive Advantage –

Resources and Capabilities

Nethra.U



Overview

• What is competitive Advantage?

• A model of Competitive advantage.

• Generic Building blocks of Competitive

advantage.• Competitive advantage-

– Resources

– Capabilities

• The Hierarchy of Development of CompetitiveAdvantages

• Case study



What is Competitive Advantage?

• The term competitiveadvantage is the abilitygained through attributesand resources to performat a higher level thanothers in the sameindustry or market .

• When a firm sustainsprofits that exceed the

average for its industry,the firm is said to possessa competitive advantageover its rivals.



Marketing and Distribution

New product Innovation

Technology

software

cheaper and even

better versions of

mobile phones

Cost leadership ,

SCM



DISTINCTIVECOMPETENCIES COMPETITVE ADVANTAGE

VALUE

CREATION



Competitive Advantage

• Types by Michael Porter

– Cost Advantage

– Differentiation Advantage

• Resource –based View

– resources and capabilities

Positional Advantages

i.e. As leader in cost or

differentiation

competitive advantage ->

Superior value



Resources

• A resource is an asset, competency, process,

skill or knowledge.

• Strength –potential to do particularly well

than its rivals

• Weakness-something does corporation poorly

•

Classified as – Tangible

– Intangible



Resources

Tangible Resources

• Financial resources- Physical plant,raw materials and equipment.

• Human abilities, including

experience, knowledge, skill,

attitude, etc.

• Organizational abilities including

structure and processes

Intangible Resources

• Technological resources, including patents, trademarks, knowledge,

etc.

• Innovation abilities, including

facilities and employee research

skills• Reputation, including perceptions

by stakeholders and brand name



DEVELOPING RESOURCES INTO

COMPETITIVE ADVANTAGESValuable

• Is the resource or capability valuable in delivering the firm’s service or product to its

• customer? This is a necessary resource quality.

Durable

• Durable Is the resource or capability temporal (i.e., will disappear over a period of time) in nature

• (e.g., a limited natural resource)?

Rare • Is the resource rare, or do many other firms have this competitive capability?

Inimitable or non-substitutable

• Is the resource or capability unique to your firm relative to the competition?

• Can a resource or capability be substituted by another one in your business or industry?

Complex

• Does a resource or capability have a breadth, scope, and complexity to make it difficultfor others to both imitate and understand

• (e.g., organizational culture)?



Capabilities

Sets of competitive

advantages that

management integratesand coordinates to

produce a multifaceted

value-producing

advantage overcompetitors.

Examples

1.learning proficiencies.2. product development

processes.

3. fast delivery times.

4.managerial abilities.



Organizational Capabilities = firm’s capacity for

undertaking a particular activity. (Grant)

Distinctive Competence = things that anorganization does particularly well relative tocompetitors. (Selznick)

Core Competence = capabilities that arefundamental to a firm’s strategy andperformance. (Hamel and Prahalad)



The Hierarchy of Development of

Competitive Advantages

Resources

Competitive Advantages

Competitive Capabilities

Sustainable Competitive Advantages andCapabilities

Core Competencies



Google's Big Three Competitive

Advantages

Technology Infrastructure Innovative Services Market Share



Technology Infrastructure

Powerful infrastructure cannot be easily

replicated.Data Center Knowledge reported that Google

was probably using somewhere around900,000 servers.

Google’s data center’s are incredibly efficient

as they use less than 1% of the power used by

data centers worldwide



Innovative Services

100 s of

Google

services –in

house and

acquisition

services at zero cost

to web users

Attractive

advertising

model



Market Share

• Google has held this strong majority of searchmarket share for quite some time.



THANK YOU !

competitive advantage – resources and capabilities

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