Any corporate policy and plan which is

typical of the industry is doomed to

mediocrity

Bruce Henderson – former Managing

Partner of Boston Consulting Group

If a man write a better book, preach a

better sermon, or make a better
mouse-trap than his neighbor, tho’ he
build his house in the woods, the world
will make a beaten path to his door.

Ralph Waldo Emerson

 Company Returns (%)
Oskosh Truck 36
Paccar 23
Johnson Controls 18
Ford Motor 7
General Motors 6
Median 6
Federal Signal 1
Fleetwood Enterprises (6)
Tenneco Automotive (11)
Federal Mogul (38)
Exide Technologies (50)

Table 5.1. 1993-2003 median returns of selected companies in the US

‘motor’ industry (Source: Fortune.com)
There are two generic forms of competitive
advantage or positioning:

Cost advantage: a firm can do the same things as its

rivals but do so at a lower delivered cost, i.e. total costs –
not just product/service costs. Such firms exploit
economies of scale, scope and learning (experience)
effects and are obsessed with efficiency and cost control.

Differentiation advantage: a firm offers something of value

that is unique or sufficiently better than rivals to be seen
as unique. These businesses create a form of monopoly in
that no other firm can deliver the same product/service-
based value to the target market. Their obsessions centre
on protecting and improving their uniqueness in brand,
product, process for instance.
Competitive strategic positions manifest
themselves in three ways:

1. The position a company adopts in terms of its stance

against competitors and its choice of buyer segments
as it attempts to fit with industry CSFs.

2. The source of value that is the primary driver of the

company’s offering.

3. The resources and capabilities underpinning that value

and the position of the firm.
Mintzberg’s four generic approaches to scope:

Unsegmentation: the firm offers the same products across a

broad range of market segments e.g. Coca Cola, Wal-Mart,
Google

Segmentation: the firm still addresses a broad range of

market segments but designs different products for those
segments, e.g. Honda, Dell, British Airways

Niche: the firm focuses on one segment of the market e.g.

Ryanair, Cray Computers, Morgan Cars

Customisation: the firm focuses on individual customers and

shapes their offering to the unique requirements of that
buyer, e.g. upmarket homes, event organization, golf course
design
Slack’s five advantage categories from Manufacturing
Advantage:

1. Quality advantage (or, “doing it right”);

2. Speed advantage (or, “doing things fast”);

3. Dependability advantage (or, “doing things on time”);

4. Flexibility advantage (or, “being able to adapt what you do”);

5. Cost advantage (or, “doing things cheap”).

 Strategy Description
Price (low cost) A lower price than rivals
e.g. the no frills airlines verses the big carriers in the
US and Europe
Image A brand or reputation
e.g. Coca cola, Mercedes, Gucci, Harvard Business
School, etc.
Support Provision of back-up or after sales service
e.g. Dell
Quality A more durable or reliable product or one with higher
performance
e.g. digital cameras (pixels)
Design Different product functions
e.g. pharmaceuticals, mobile phones
Undifferentiation Same as the others
e.g. Car rental firms, financial service firms, petrol
stations, steel companies etc.

Table 5.2 Differentiation strategies (Source: Mintzberg, 1998)

Resources and capabilities – the resource-based-view
(RBV)

CASIS outlines how a resource/capability can provide a

competitive advantage for a company if it is:

1. Congruent with CSFs of the Industry +

2. Non-Appropriable +

3. Non-Substitutable +

4. Non-Imitable: +
a. Physically unique
b. Expensive to develop
c. Path-dependency
d. Causal ambiguity

5. Supported organizationally
 
1. Account for the rise of
Tesco’s.

2. Explain Tesco’s
strategic strength today.

3. What strategies might J.

Sainsbury have pursued to
combat Tesco’s?
1. Could you define Ottakar’s

position on the back of a business
card?

2. Ottakar’s had generally taken an

evolutionary approach to change in
order to build on their existing
resources and capabilities…?

3. While Ottakars new websites may

have only constituted a change to
operational facilities how might its
operations and performance ripple
through the organization and its
strategic positioning?

4. If you were James Heneage how

would you have responded to The
Sunday Times’ review?
1. Do you think that BMI’s
‘low-cost, full-frills’

position could have provided
them with a competitive
advantage?

2. Will the advent of

BMIbaby help or hinder
BMI’s attempts to position
itself effectively?

3. How would you seek to

position BMI and BMIbaby?
Can you express each of
these positions in eight
words or less?
 
1. Draw up a list of the key
questions that are critical to
understanding whether
Universal should enter the
UK market.

2. What data would you need

to aquire (and how would
you get it) to be able to
answer your questions?
1. Define Hugyhe’s
strategic advantage.

2. Define Interbrew’s
strategic advantage.

3. If you were a fund

manager which firm would
you choose to invest in?
Give reasons for your
answer.

4. What advice would you

give Huyghe and Interbrew
for the future?
1. Assuming you can get no
further information, what would

your overall intention for this
decision making process be?

2. Assuming you can get no

further information, what would
your first decision on furniture
be?

3. What then would your strategy

be as the rest of the decision
making process unfolds?

4. What does this case and the

application of game theory teach
us about strategy?
1. Has IBB identified
imperfections in the market,

or is this really a mirage?

2. How can IBB compete

with large well-resourced
incumbents?

3. Should IBB focus on

increasing its product range
(scope) or open new
branches?

4. Would the creation of an

online banking facility help?
Why?
1. What resources and
capabilities might Tayto’s

have that will be difficult for
Walkers to replicate?

2. If you were CEO of

Tayto’s, what strategies
would you employ to protect
the company’s advantage?

3. If you were CEO of

Walker’s Ireland, what
strategies would you employ
to build the company’s
advantage?
1. Can you broadly draw
Komatsu’s strategic

position (or positions)
relative to Catapillar on the
generic strategy matrix?

2. What advantages might

this simple drawing provide
to Komatsu employees,
suppliers and distributors?

3. How might Catapillar

position itself in response to
Komatsu’s encircling
strategy, should Komatsu’s
strategy prove to be
successful?
 
1. Do you think Cereality
have a sustainable
competitive advantage? If
not, why not? If so how
would you articulate it?