HOW DOES ONE BUILD A SUSTAINABLE COMPETITIVE ADVANTAGE?

Through govt protection: monopolies, regulations & tariff protection

But govts change, de-regulation occurs & tariffs are reduced

Through proprietary products and processes

(e.g. patents, new facilities, and the latest equipment)
But patents expire and are designed around or made obsolete Competitors can build (or move to) similar facilities and buy even newer equipment

Through an entrenched industry position

(defended by entry barriers, alliances & diamonds
But industries evolve, and diamonds disintegrate

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if resources, relative power, and positionare so important,

HOW CAN ONE EXPLAIN:

The postwar success of Germany, Japan, and the Four little dragons of Asia?
Almost no money, natural resources, or scale economies

The decline of dominant industry leaders?

(e.g. U.S. Steel, PanAm, Friden, RCA, Texas Instruments, etc)

The collapse of powerful, long established industrial diamonds?

the U.S. textile industry in New England the U.S. auto industry around Detroit the U.S. steel industry around Pittsburgh the U.S. television industry around Chicago

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BUILDING A COMPETITIVE ADVANTAGE THROUGH SUPERIOR OPERATING CAPABILITIES

Real sustainability doesnt come from what you can buy, but from what you can do buy
Create patents and/or introduce new products faster than can your competitors Be able to routinely be the first company to make use of the latest processing technologies Achieve higher productivity, quality, and customer satisfaction using similar equipment and facilities

Operating capabilities that are embedded in peoples skills and organizational processes (operations infrastructure):
Cannot be bought on any market Are difficult to imitate Take a long time to develop
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AN EXPANDED ROLE FOR OPERATIONS STRATEGY

SELECT, SELECT CULTIVATE, and CULTIVATE FIND WAYS TO EXPLOIT INTERNAL OPERATING CAPABILITIES

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the components of a dynamic OPERATIONS STRATEGY

FIT: with the business units competitive strategy and the needs of other functional groups FOCUS attention and resources on the products, processes, and improvement activities that are really important (and divide into separate operating units, if the whole becomes too complex) CONTINUAL IMPROVEMENT of existing capabilities, and the development of new ones that have the potential to create competitive advantage ROLE: establish high expectations throughout the company for the contribution that operations can make, and a pro-active mentality within the operations group itself
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