Lecture 3 Summary

• Distinctive Competencies (resources and capabilities)

• Profitability and Value Creation (profit margin, consumer
reservation price, consumer surplus)
• Building Blocks of Competitive Advantage (quality, innovation,
efficiency, customer responsiveness)
 [Hill. 2013]

Lecture 4
Competitive Advantage through
Functional-Level Strategies
 Overview of Lecture

• Roots of Competitive Advantage

• Achieving Superior Efficiency
• Achieving Superior Quality
• Achieving Superior Innovation
• Achieving Superior Customer Responsiveness
 Block 1. Achieving Superior Efficiency

• Economies of Scale
• Diseconomies of Scale
 Block 1. Achieving Superior Efficiency

• Experience Curve
• Learning Effect
 Block 1. Achieving Superior Efficiency

• Flexible Product Technology

• Mass Customization (e.g. my M&M’s)
 Block 1. Achieving Superior Efficiency

• Marketing (4Ps)
• Customer Defection
Acquiring vs Retaining
Free Advertising via Loyalty
 Block 1. Achieving Superior Efficiency
• Just-in-time Inventory
• Supply Chain Management

https://www.youtube.com/watch?v=Mi1QBxVjZAw
 Block 2. Achieving Superior Quality

• Quality as Reliability
• Quality as Excellence
 Block 3. Achieving Superior Innovation
High Failure Rates

Reducing Innovation Failures by:

• agile development (minimum viable product)
 Block 4. Achieving Superior Customer
Responsiveness

• Demonstrating Leadership (mission statement)

• Shaping Employee Attitudes (4 Seasons Hotel)
• Customizing
• Responding Time
 Lecture Takeaways

• 4 Building Blocks of Competitive Advantage

• Achieving Superior Efficiency (economies of scale, learning effect, flexible
product technology, mass customization, JIT, customer defection
• Achieving Superior Quality (reliability, excellence)
• Achieving Superior Innovation (high failure rates, reducing failures)
• Achieving Superior Customer Responsiveness