GYAAN KOSH

TERM 2
Learning and
Development Council,
CAC

Competitive Strategy
This document covers the basic concepts of Competitive
Strategy covered in Term 2. The document only summarizes
the main concepts and is not intended to be an instructive
material on the subject.

The document only covers the Frameworks that we have used.

For application to specific cases discussed in class, please refer to
the class lecture slides.

Gyaan Kosh Term 2

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Learning & Development Council, CAC

CONTENTS
1. The Industry and its Implications for Strategy and Performance
2. Creating Advantage through Competitive Positioning
3. Sustaining Competitive Advantage
4. Managing Industry Transformation and Change
5. Growth through International Expansion
6. Creating Advantage and Growth through Diversification
7. Effective Strategy Execution

Gyaan Kosh Term 2

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Learning & Development Council, CAC

The Industry and its Implications for Strategy and Performance

Key Elements of Industry Structure:
Impact on Industry Performance/Attractiveness

Let us look at each of the Forces with Examples:

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Learning & Development Council, CAC

Example of the Framework Applied to the Concentrate Producers in the Cola Wars Case

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Creating Advantage through Competitive Positioning

The Basis of Differentiation

Here we look at two distinct companies:

1. Southwest Airlines which Practices Low Cost Leadership as its Competitive Advantage
2. Ducati which Practices Focused Differentiation as its Competitive Advantage

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SOUTHWEST AIRLINES

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DUCATI

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Sustaining Competitive Advantage

Industry Evolution and Life Cycle

The Apple Case best illustrates the dynamics of sustaining competitive advantage. It analyzes how the
industry structure changed over the periods and how the resource and capabilities of Apple also changed
causing it to lose the competitive advantage in a period and then later regain it.
The Resource and Capability Framework applied in this case is shown below:

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Learning & Development Council, CAC

Managing Industry Transformation and Change

The Kodak Case was used to illustrate the theme Why Companies Fail. Specifically, the Role of Inertia
(Cognitive and Action) in sustaining success was explored.

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Ways to address Cognitive Inertia

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Growth through International Expansion

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GEs GPC Model is evaluated on Aggregation, Adaptation and Arbitrage:

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Strategies for Growth: Growth through Innovation

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Creating Advantage and Growth through Diversification

Diversification into New Businesses:
Some Key Criteria or Tests

Better off Test (Synergy Test) :

The new unit must either gain competitive advantage from its link with the corporation or vice versa

Cost of Entry Test:

The cost of entry must not capitalize all future profits

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Learning & Development Council, CAC

Gyaan Kosh Term 2

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Learning & Development Council, CAC

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Learning & Development Council, CAC

Unrelated Conglomerate Companies:

Why does it create value in Emerging Economies?
Under-developed Capital markets:
Companies are unable to easily raise money from the market to fund risky, growth
businesses. In such cases, they are best funded from internal resources from other existing
businesses.
Shareholders do not have enough information or opportunity to invest excess, returned
cash on their own in alternate avenues.
Inefficient or Under-developed Labor Markets:
With a diversified portfolio of businesses companies can provide a safety net to their
employees.
Therefore they can attract and retain talent much better.
Inefficient or Under-developed Product Markets
Mechanisms for Consumer protection is traditionally under-developed in most emerging
economies.
Large, conglomerate companies (e.g. Tata, Birla) make for this void on account of their
presence/brand-name, etc.

Gyaan Kosh Term 2

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Learning & Development Council, CAC

Effective Strategy Execution

The Link between Strategy and Execution:

Strategy and Implementation:

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Example of the framework applied to Schindler India Case

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