Creating Competitive Advantage P. Ghemawat & J. Rivkin Cont’d. How does a firm identify opportunities to create competitive advantage Dumb (or smart) luck. Strategists Pankaj Ghemawat and Jan Rivkin appear in the HBR February edition. In it, they examine why large differences in economic performance exist, . Creating Competitive Advantage P. Ghemawat J. W. Rivkin December 22nd, Submitted By: Group A5 – Section A Ajay Bansal Alpesh Chaddha Aman.

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Differences in industry structure shed some light on such differences in performance. Just as willingness to pay captures the most that buyers will pay for a product, opportunity cost is the least that suppliers will accept for the resources used to make a product. Toward that end, this note uses the notion of competitive advantage. The snack cake-buying parent, for example, selects among brands on the ghemaat of price, brand image, freshness, product 29 variety, and the number of servings per box.

In other industries e. Rivkn observers have even argued that companies should move 31 beyond segmentation to embrace mass customization.

A farm with more productive soil, for instance, will incur lower fertilization costs. Sheer entrepreneurial insight certainly plays a large role in spotting such opportunities. To use this website, you must agree to our Privacy Policycreatinb cookie policy. A number of references discuss cost drivers in greater detail and suggest specific ways to model 24 them numerically. There are two basic ways a firm can establish an advantage. Over the same period, U.

The logic laid out so far suggests that a firm can boost its conpetitive value by widening the wedge it achieves between customer willingness to pay and supplier opportunity cost beyond what rivals attain. Portal cranes were designed to lift entire tree-length logs off of railcars and trucks and to hoist them around woodyards.


Creating Competitive Advantage P. Ghemawat & J. Rivkin – ppt download

As noted above, a firm can achieve a competitive advantage by devising a way to 1 raise willingness to pay a great deal with only slight increases in costs or 2 reap large cost savings with only slight decreases in customer willingness to pay.

Leave a Reply Cancel reply Enter your comment here The essence of creating advantage is finding an integrated set of choices that distinguishes a firm from its rivals. The added value of a firm is the value created by all participants in a transaction minus the maximal value that could be created without the firm. Willingness to pay often depends heavily on intangible factors and perceptions that are hard to measure.

Some decisions affect both the opportunity cost and the willingness to pay e. The tension between cost and willingness to pay is not absolute: It is often helpful to distill the essence of what drives each competitor. Effective cost analyses usually break out in greatest detail and pay the most attention to cost categories that 1 pick up on significant differences across competitors or strategic options, 2 correspond to technically separable activities, or 3 are large enough to influence the overall cost position significantly.

First, companies that generate competitive advantages typically do so by devising strategies that neutralize the unattractive features of their industries and exploit the attractive features.

Karen Mills and Jan W. This site uses cookies. It standardizes its fleet around fuel-efficient Boeing s, concentrates on short-haul point-topoint routes between midsize cities and secondary airports, offers very low ticket prices and no-frills service no assigned seats, food service, baggage transfer or connections with other airlinesemphasizes quick turnaround times, and manages to keep its planes in the air onethird longer each day than the average airline.


A mere penny remained as profits for Collins.

Creating Competitive Advantage

To see why this is so, assume for a moment that a lucky firm does strike a deal that allows it to capture more than its added value. Industry analysis is crucial to creating competitive advantage for several reasons.

Fleet management would involve a shift from selling power tools to leasing them as a service. Casadesus-Masanell, Ramon, and Jan Rivkin.

Explore Options and Make Choices When exploring options, the management team must work vigilantly to build a vision of the whole Competitive advantage comes comletitive an integrated set of choices about activities A firm must usually consider changing many of its activities in unison in order to improve long-term prospects When considering changes in activities, it is crucial to consider competitors reactions.

How SocialMedia Marketing Changed in creatimg. In some settings, creative insight may have to replace analysis.

Published by Peregrine Hawkins Modified 5 months ago. A wide range of market research techniques—surveys, hedonic pricing, attribute ratings, conjoint analysis, etc.

Differences across firms in activities—differences in what firms actually do day-to-day—produce disparities in cost and willingness to pay and hence dictate competitive advantage. As courses on management accounting point out, conventional accounting 13 This document is authorized for use only by Samantha Steinberg in Strategic Management Honors advvantage by Dr.