WHAT STRTAEGY IS:

GAINING AND SUSTANING

COMPETITIVE
ADVANTAGE
What is a
Strategy?
Strategy is a set of goal
– directed actions a firm
takes to gain and
sustain superior
performance relative to
competitors.
A good strategy
consist of tree
elements:
1. A diagnoses
of the
competitive
challenge
 This elements is
accomplished through
analysis of the firm’s
external and internal
environment.
 3. A set of coherent
actions to implement the
firm’s guiding policy. This
elements is accomplished
through strategy
implementation.
 The
Competitive
Challenge
A good strategy needs
to start with a clear
and critical diagnosis
of the competitive
challenge.
A Guiding
Policy
After the diagnoses of
the competitive
challenge, the
strategist needs to
formulate am
effective guiding
What is a competitive
advantage?
What is a competitive
advantage?
Why is twitter
struggling?
In contrast, Why
are Facebook
and Google so
successful?
 What enables some
firm to gain and then
sustain their
competitive
advantage over
How can managers
influence firm
performance?
 These are the big
questions that define
strategic
management.
 Strategic Management is
the integrative management
field that combine analysis,
formulation, and
implementation in the quest
for competitive advantage.
 Coherent Action – clear
guiding policy needs to be
implemented with a set of
coherent action.
A good strategy is more
than a mere goal or a
company slogan:
 Twitter slogan:
“Ambition is to have
the largest audience in
the word”
 Twitter slogan:
“Ambition is to have
the largest audience in
the word”
 It is not a good
strategy and theirs no
strategy at all. Rather
it is a mere statement
of desire.
 1. A good strategy
defines the
competitive challenges
facing an organization
through a critical and
honest assessment.
 2. A good strategy
provides an
overarching approach
on how to deal with
the competitive
challenges identified.
 3. The approach need
to be communicated in
policies that provide
clear guidance for all
employees involved.
 4. A good strategy
requires effective
implementation
through a coherent set
of action.
 What is
Competitive
Advantage?
 Competitive
advantage is always
relative, not absolute
 To asses competitive
advantage we compare
firm performance to a
benchmark q – that is,
either the performance of
other firm in the same
industry or an industry
 A firm that achieve
superior performance
relativeqto other
competitors in the same
industry or the industry
average has a
competitive advantage.
Example: In smartphone,
Apple has qachieved a
competitive advantage
over Samsung.
 A firm that is able to
outperform its
competitors
q
or the
industry average over a
prolonged period of time
has a sustainable
competitive advantage.
How to gain
q
competitive
advantage?
 advantage, a firm needs
to provide either goods or
services consumers
q
value
more highly than those
competitors or goods or
services similar to the
competitors at a lower
Example: Steve Jobs
He wanted to “put a
ding in the
q
universe” making a
difference by
delivering products
and services people
Built Facebook to
q the word
make
more open and
connected.
 Larry Page of
Google. He wants
to
q make the
world’s
information
universally
Strategy is about creating
superior value, while
containingqthe cost to
create it. Managers
achieve this combination
of value and cost through
strategic positioning.
Unique position within an
industry that
q
allows the
firm to provide value to
customers, while
controlling the cost.
Cost Advantage is able
to produceq goods or
services at a lower cost
than its competitors.
 Competition focuses on
creating qvalue for
customers (through lower
prices or better service
and selection)
A clear strategic profile,
allows eachq
retailer to
meet specific customer
needs rather than
destroying rivals.
 To gain deeper
understanding of what
strategy is, it may be
q
helpful to think about
what strategy is not. Be
on the lookout for the
following major hallmark
 1. Grandiose
q
statement are
not strategy.
“Our strategy
q is
to win”
“We willq be No.
1”
 Twitter:
“Ambition is to
q
have the largest
audience in the
world”
Such statement of
desire, qon their
own, are not
strategy.
 An effective vision
and mission can lay
q
the foundation
upon which to craft
a good strategy.
2. A failure to face
a competitive
q
challenge is not
strategy.
 If the firm does not
define a clear
competitive challenge,
q
managers have no way
of assessing whether
they are making progress
 Example: Failed to
address the competitive
challenge posted
q by new
player BiliBili, Netflix,
Amazon Prime, and
Disney.
 3. Operational
Effectiveness,
competitive
q
benchmarking, or other
tactical tools are not
strategy.
 People casually refer to a
host of different policies and
initiative as some sort of
q
strategy: pricing strategy,
Internet strategy, brand
strategy, marketing strategy
and so on.
All these elements may be
necessary part of a firm’s
functional and global
initiatives to
q support its
competitive strategy, but
these elements are not
sufficient to achieve
 We will reserve the term
strategy for describing the
q
firm’s overall efforts to
gain and sustain
competitive advantage.