This past quarter I had two MBA classes, statistics and a class called Achieving Competitive Advantage. (8 weeks is technically a sixth, not a quarter, but that sounds weird!)
For this class we worked remotely in groups to make a Powerpoint competitive analysis of an assigned company, including both slides and extensive slides notes written like a research paper. My team’s industry was athletic footwear and we were assigned Adidas as the company to analyze. I learned a lot about the workout shoe industry and the top sports shoe companies these past 8 weeks! I also became very familiar with Google Slides and What’s App, our group’s chosen work tools. Thanks to the ladies of Team Adidas for being a great team of 100% achievement!
A company has a competitive advantage over its rivals “when its profitability and profit growth are greater than the average of other companies competing for the same set of customers. The higher its profitability and profit growth relative to rivals, the greater its competitive advantage will be” (textbook, see below).
Creating a formal business model strategy has five steps:
One interesting section of this chapter was a list of characteristics of high-performance strategic leaders:
This list contains helpful ideas about areas of improvement, for both current and future leaders in business.
External analysis is all about understanding the opportunities and threats to a company. First, define the industry the company competes in, using the customer’s point of view to decide which customer needs the company meets. A model called Porter’s Competitive Forces is helpful for external analysis, read more here. Other external analysis topics in this chapter included strategic groups, the industry lifecycle, and the macro environment of economic, global, technological, demographic, social, and political forces that can affect a company.
Part of internal analysis is identifying a company’s distinctive competencies, which are specific strengths that allow a company to differentiate their product and/or lower their costs compared to competitors. Distinctive competencies give companies a competitive advantage. For example, Apple’s distinctive competency is design since customers want to own their products because of their sleek, modern design and intuitive user experience.
A company’s resources can play a role in distinctive competencies. Resources can include aspects of production such as labor, land, etc. as well as non-physical resources like employee knowledge, patents, and more. Internal analysis also studies a company’s value chain, which is the cycle of research & development (R&D), production, marketing & sales, and customer service. This chain of activities cycles through in a row, with logistics, human resources, information system, and company infrastructure supporting every step in the chain. An internal analysis also studies the four building blocks of competitive advantage: efficiency, quality as excellence and reliability, innovation, and customer responsiveness.
Functional level strategy consists of the actions managers take to improve efficiency and effectiveness of one or more of the value chain activities described above. Efficiency includes building economies of scale, which is saving money by producing in large quantities. Efficiency also studies the learning effects of becoming more efficient the more times a task is completed, up to a certain point. Quality is important to study because high-quality products are reliable, they do the job well, and they are perceived by the customer to be superior to competitors’ products. GE’s six sigma quality improvement process is interesting to read more about. Innovation can often improve efficiency and effectiveness in a functional level strategy, but there is a high rate of failure. Customer responsiveness is part of functional level strategy, centered on giving customers what they want, when they want it, at a price hey are willing to pay… without compromising profitability.
Business level strategy is “the overarching competitive theme of any given market” (textbook), which is WHOM a company decides to serve: which customer segments, what customer needs and desires to satisfy, and how to satisfy those customer needs and desires. Business level strategy is usually described in the company’s mission statement. Two main strategies are a low cost strategy vs. a differentiation strategy, which was explained by comparing the strategy of Walmart vs. Nordstrom. There are different combinations and degrees of low-cost and differentiation strategies a company can pursue, such as Gap competing in a market space between Walmart and Nordstrom.
Spanish fast-fashion brand Zara was profiled in an textbook example which explained Zara’s competitive advantage of speed, achieved by breaking most of the traditional “rules” of fashion companies.
The book used for class was Strategic Management, 12th edition, by Hill, Schilling, and Jones. Rent it on Amazon Textbook Rental around $20 for several months. Thank you Amazon Textbook Rental! We only covered about half the book in class, you could learn a lot from this easy-to-understand book filled with lots of interesting examples.
I started the online MBA program at Montclair State University in January 2017.