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What is
Sustainable
Competitive Advantage?
Sustainable competitive advantage
is the prolonged benefit of
implementing some unique value-creating strategy based on unique
combination of internal organizational
resources
and
capabilities
that cannot be replicated by competitors...
More
Case in Point
Warren Buffet's Investment Criteria
Warren Buffet was once asked what is the most
important thing he looks for when evaluating a company to
invest in. Without hesitation, he replied, "Sustainable competitive
advantage."
Case
in Point
Amazon.com
New
business model developed by Amazon.com
creates value for customers by offering a
synergistic
combination of the following benefits:
-
Shopping convenience
-
Ease of purchase
-
Speed
-
Decision-enabling information
-
A wide selection
-
Discounted pricing
-
Reliability of order fulfillment
No single aspect of
Amazon.com's business model is sufficient to create a sustainable
competitive advantage. It is the
synergistic combination of all of these information services and
logistical processes that creates value for customers and comprise Amazon.com's competitive advantage....
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Toyota’s global competitive
advantage is based on a corporate philosophy known
as
the
Toyota Production System. The system depends in part on a human
resources management policy that
stimulates employee creativity and loyalty but also on a highly
efficient network of suppliers and components manufacturers...
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Workforce
Create a workforce that
would provide a competitive advantage
"An intelligent and integrated
human resources strategy is the only sustainable competitive
advantage... Every other corporate asset can be bought or replicated
virtually overnight, but competitors seeking to duplicate a well-trained,
motivated, and committed workforce will need at least a decade to catch up.
Exceptional
Exceptional cultures just can't be created with the wave of wand – or a major
infusion of capital," says Mark Stevens, the author of Extreme
Management.
Build on Your Core
Competencies
The
core competencies
are the things your
company can do better than your competitors.
If a core competency yields a long term
advantage to the company, it is said to be a sustainable competitive
advantage.
As a leader, you must focus
your firms resources on what it does best and what creates
competitive advantage. Some technical and business competencies can
be in short supply however. You can address these missing
competencies by using three approaches: internal development,
acquisition of an outside firm, and
partnering.
Own Your
Competitive Advantage
Focus on your
core competencies and
outsource the rest. Make sure that you don't outsource your competitive
advantage, however. You will never
lead in innovation or
be faster to market than your competition if you depend on other for
your core technology.
Owning your competitive advantage will allow you to build it
continuously, be more flexible, and eliminate speed breakers.
Barriers to Entry
Barriers to entry
are circumstances particular to a given industry that create disadvantages
for new competitors attempting to enter the market...
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The Role of Intellectual
Property Rights and Strategy
In most industries,
intellectual property rights (IPR), especially
patents and their exploitation,
hold key significance in the development and commercialization of
new products.
Businesses should have an intellectual property strategy as part of their
corporate planning and
strategy...
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