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    You are on page 1of 8

    The Competitive Landscape

    Building Competitive Advantage


    Sustaining Competitive Advantage

    Developing a Sustainable Competitive Advantage


    Topic 3
    1. Understanding the Competitive Landscape The Competitive Landscape
    2. Define the Scope of your Business
    3. Select the Activity set of your Business
    Topic 4
    4. Assemble the needed Resources and develop the key Capabilities
    Building Competitive
    Advantage
    5. Set up the Business Model to link Value Creation and Value Capture and
    create a Virtuous Cycle
    6. Understand the Sustainability of your Competitive Advantage Topic 5
    Sustaining Competitive
    7. Test your Strategy Advantage
    The Competitive Landscape

    Developing a Sustainable Competitive Advantage

    1. Understanding the Competitive Landscape


    2. Define the Scope of your Business
    3. Select the Activity set of your Business
    4. Assemble the needed Resources and develop the key Capabilities
    5. Set up the Business Model to link Value Creation and Value Capture and
    create a Virtuous Cycle
    6. Understand the Sustainability of your Competitive Advantage
    7. Test your Strategy
    Performance differences between companies are difficult to explain

    McGahan and Porter


    find 18 %
    Total variance in performance 100 %

    Explained by stable 8.28 %


    characteristics of industry

    Explained by business cycle 7.84 %

    Explained by competitive position 46.38 %

    Not explained 37.50 %


    Source: Richard R. Rumelt

    General success factors do not appear to exist !

    Strategy and the Drivers of Enterprise Value

    Industry Value System


    Sales
    growth

    Enterprise
    Enterprise
    value

    Value
    Resource
    Margin Drivers of ROIC
    utilization

    Resources,
    Scope Activities Capabilities &
    Business Model

    Firm Specific
    Industry Attractiveness

    • Industry attractiveness refers to the future average returns expected for firms
    operating in this industry
    • Depends on:
    1. Longterm Trends: expectations about the obsolecence of activities linking
    buyers and suppliers and/or core assets
    Do: trend analysis, scenario planning,…
    2. Definition of Industry: Product-Technology Combination (Markets interact
    industries with customers)
    3. Drivers of Value Capture at Industry Level

    Average Returns across Industries

    Porter (2008)
    Is the U.S. Legal Marijuana
    Industry an attactive
    Industry?

    What is the Average Value


    Captured by a Player in the
    Industry?
    Porter’s 5-Forces Model
    THREAT OF 2
    NEW ENTRANTS

    BARGAINING 5 RIVALRY AMONG 1 BARGAINING 4


    POWER OF EXISTING POWER OF
    SUPPLIERS COMPETITORS CUSTOMERS

    THREAT OF
    3
    SUBSTITUTES

    Competition for Profits (Value Capture) goes beyond established rivals.

    Source: Porter, “The Five Competitive Forces that Shape Strategy”(2008).

    The Industry Value System

    Entry Substitutes Substitutes

    Suppliers Rivals
    Intermediate Final
    Buyers Customer

    Complements Complements

    12
    Industry Architecture & Bottlenecks
    Computing Industry: 1990 - Present

    Dynamics of Industries

    Source: Bradley, C., Hirt, M, & S. Smit (2018) “Strategy: Beyond the Hockey Stick”
    Dynamics of Industries

    Jacobides and MacDuffie (2013)

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