INSY 2301 Lecture Notes - Lecture 2: Variable-Length Intake Manifold, Information Asymmetry, Freshdirect
22 Jun 2018
School
Course
Professor
Strategy and Technology
Sustainable Competitive Advantage
Definition: Financial performance that consistently outperforms competitors
oWhat is Apple’s competitive advantage? The Apple “ecosystem” in which all
products (iPhones, Macs, iPads, etc.) are synced - a superior user experience
The goal of a firm is to establish a sustainable competitive advantage
Difficult to establish since technology helps firms keep track of and match competitors
Efficiency-Based Competition
Operational Effectiveness: Performing the same tasks better than rivals perform them
oOperational effectiveness is NOT a strategic position
Strategic Positioning: Performing different activities from those of rivals, or the same
activities in a different way
Without strategic positioning, the fast follow problem exists
oRivals watch a pioneer’s success/missteps, then enter the market with a
comparable or superior product at a lower cost
Technology is not an advantage
oRivals can match technology advancements step-by-step, eroding profits
Case Study: FreshDirect
NYC-based online grocer that sought to address two problems facing NYC shoppers:
limited selection and high prices
Virtual storefront, warehouse in low-rent industrial area in Queens
Superior system of logistics…high inventory turnover, artificial intelligence software
(leading to 99.9% accuracy), direct relationships with suppliers, low delivery costs, low
energy costs
Operational effectiveness leads to massive margins (~20%), compared to the industry’s
razor-thin margins of 1%
Resource-Based View of Competitive Advantage
In order to maintain a sustainable competitive advantage, a firm must control a set of
exploitable resources with four characteristics
oValuable: The resource must be worth something
oRare: Other firms must not have access to the resource
oImperfectly Imitable: Other firms must not be able to imitate the resource
oNonsubstitutable: Other firms must not be able to find a substitute
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
The apple ecosystem in which all products (iphones, macs, ipads, etc. ) are synced - a superior user experience. The goal of a firm is to establish a sustainable competitive advantage. Difficult to establish since technology helps firms keep track of and match competitors. Operational effectiveness: performing the same tasks better than rivals perform them: operational effectiveness is not a strategic position. Strategic positioning: performing different activities from those of rivals, or the same activities in a different way. Without strategic positioning, the fast follow problem exists: rivals watch a pioneer"s success/missteps, then enter the market with a comparable or superior product at a lower cost. Technology is not an advantage: rivals can match technology advancements step-by-step, eroding profits. Nyc-based online grocer that sought to address two problems facing nyc shoppers: limited selection and high prices. Virtual storefront, warehouse in low-rent industrial area in queens.
