1. Chapter 3 Positioning and Competitiveness
Designing a Competitive Business Model and Building a Solid Strategic Plan

2. 3 What Is a Competitive Advantage?
Your book’s definition:
A collection of factors that set you apart
“Honda’s competitive advantage is their engine technology.”
Everyone else in the free world:
The status of having superior performance over your competitors (through some collection of factors)
You either have a competitive advantage or you don’t
It’s not what you have, it’s the fact that you have something that makes you better.
“Toyota has a competitive advantage over Ford”
Toyota’s 2012 profit margin: 4.36% on $247 B in sales; Ford’s: 4.22% on $134 B sales
What makes Toyota better?

3. What Can Make You Better (and give you a competitive advantage)
Products you sell
Technology
Inexpensive inputs (labor, parts)
Rareness
Service you provide
Hours open
Convenience of location
Friendliness and helpfulness
Pricing you offer
Reasonable, NOT NECESSARILY LOWEST

4. Entrepreneurs of the Day
Greg Watkins (producer) and Chuck Creekmur (journalist)
#1 urban website in ten years of existence (started in 1998)
Originally wanted to promote a fledgling production label (Oblique Recordings)
Also wanted to provide a one-stop shop for urban content (downloads)
Used by industry great Russell Simmons for keeping up with news
In 2003, site made enough money so that both entrepreneurs could quit their jobs.
Revenue exceeded $4 million in 2007

5. Value Rareness Imitability Organization
The Sustainable Competitive Advantage – The VRIO Framework (NOT IN THE TEXT)
Value
The factor has to provide value to customers
Rareness
Not everyone can have this factor
Imitability
The factor must be hard to copy or substitute
Organization
The business must have the right policies and operational know-how to nurture the factor.

6. The Sustainable Competitive Advantage – The VRIO Framework
Let’s take this through an example – how about McDonald’s fries? Are they a source of competitive advantage for McDonalds? Can they be a sustainable source of competitive advantage over others?
How do we know if McDonald’s even has a competitive advantage over other restaurants?
What other things might be factors for competitive advantage in the fast food subindustry?

7. What Types of Things Can Bring About a Competitive Advantage?
Superior customer intimacy
Understanding exactly the mix of things customers want in your product or service
Focus
Fewer product lines; better understanding
Cost control
Knowing your financials and controlling them, not the other way around

8. The Purpose of a Strategic Plan
To set up your business to achieve competitive advantage status
How?
Planning of resource allocation (budgets, time, attention, etc.)
Resources build key competitive factors
Factors build your competitive advantage

9. What Does a Strategic Plan Look Like?
Has mission, vision, and values
Has company goals and objectives
Has SWOT analysis
Has short-term and long-term plans for
Marketing (promotion, distribution, product development)
Management development and succession
Market or locale dominance

10. The Strategic Management Process
Develop mission, vision, values, goals, and objectives.
Do an environmental scan.
Set appropriate strategies that take scan into consideration.
Implement the strategies.
Evaluate whether you hit your objectives, feedback and learn.

11. Environmental Scan Internal Environment External Environment
Strengths and weaknesses
Management, marketing, human resources, capital
External Environment
Opportunities and threats
Competitors, suppliers, customers, ability to meet the demands of your environment

12. Strategy Forming and Implementing
Come up with plans for the next 5 years for:
Keeping high quality management
Expanding product lines and pricing them
Expanding impact in the market
Expanding locations
Keeping cost levels down
Promoting yourself
Break these down into to-do lists with deadlines; assign responsibilities.

13. Types of Strategic Positions
Business-level strategies and market segments
Cost leadership
Differentiation
Focus
Focused cost leadership
Focused differentiation
Last step: create a control system to monitor when things are not going to plan.