SGMT 3000 Chapter Notes - Chapter 3: Competitive Advantage, Value Chain, Customer Service

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Gives managers info needed to choose strategy and business model. Competitive advantage when its profitability is > than average profitability of all companies in industry. Sustained competitive advantage when it"s able to maintain above average profitability over a # of years. Primary objective of strategy: achieve sustained competitive advantage. Will result in superior profitability and profit growth. Distinctive competencies: firm specific strengths that allow a company to differentiate its products and/or achieve substantially lower costs to achieve a competitive advantage. Arise from 2 complementary sources: resources, capabilities. Divided into 2 types: tangible resources: physical entities, such as land, buildings, equipment, inventory, and money, intangible resources: nonphysical entities such as brand names, company reputation, experiential knowledge, and intellectual property, including patents, copyrights, and trademarks. Valuable when they enable firm to create strong demand for products or lower costs. More likely to lead to sustainable competitive advantage if they are: rare, competitors don"t possess them, difficult to imitate because of barriers.

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