Done by :

Nour Ouda

Salam El-Helw Hadeel Garghon

Supervised by :Dr. Nizar naim

Opening CaseIn 2007, Hyundai motor company has put a new car on markets.

The new car is “GENESIS” Genesis’ main consumer target is high-income grade. The reason of launching Genesis is that Hyundai motor will be target a high-grade car market over the world.

Until 1990s, Hyundai was treated “ Cheep price, suitable quality “ In US car market.

But, Global car market is more and more intense. So, Hyundai do not survive existing cost-leadership strategy.

Opening Case

In 2007, Hyundai motors has launching High-Class Premium Car “GENESIS”

The Means of GENESIS is that Hyundai will be concentrate the premium car market and Differentiation is new strategy on Hyundai.

1. What is the Competitive Advantage?

2. Source of Global Competitive Advantage

3. Competitive Advantage by Porter

Contents

Competitive advantage

by competitive adv.:

The company will be able to apply to strong point

Without being what does not evaluate a property and the ability which the company possesses

Competition company comparison will lead and the strong point which is relative could be grasped.

The strategy which sees from viewpoint of competitive advantage

Continuous a competitive advantage reinforcement and competitive advantage endeavors not to disappear

The reason of enterprise have a competitive advantage

1. Customer satisfaction and loyalty increase, Increase of profit , Increase of market share → bring market perfomance

2. The product offering which is value in the market →  competitive advantage offering valuable product and service

3. various size and scope and profitability of company  → The competitive advantage makes the base will be able to expand the enterprise which is various.

Competitive Advantage Cycle.

 

Step 1. Source of Competitive Advantage          Superior assets          Super Capabilities        Key Success Factor  Step 2. Barriers to Imitation         

higher the barrier to entry to company          When the new business opportunity coming from the Market which enters first mover advantage        barriers to imitation 

Step 3. Value proposal form of competitive advantage          Operational Excellence           Product Leadership          Customer relationship                  

Step 4.Eencroachment aprevents of competitive advantage        

     New competitive advantage position construction

    effort encroachment prevents of competitive advantage   Reinvestment of profit

asset and capability accumulation      resource strengthen of competitive advantage

A Model of Competitive advantage

Resources

DistinctiveCompetencies

Capabilities

Cost advantageOr

Differentiation advantage

ValueCreation

Competitive Ad-vantage sources

Cost advantage

DifferentiationAdvantage

Simila

r pro

duct

At lower

cost

Higher priceFor unique product

Niche advantage\ source

Main aspects of five forces analysis

1. the rivalry between existing sellers in the market

2. the potential threat of the entry of new competitors

3. the threat of substitute products becoming available the market

4. the bargaining power of consumer

5. the bargaining power of suppliers

Competitive advantage strategies

1. Cont,,1. Cost Leadership (Low Cost Strategy) produce goods level of equal more inexpensive,,(producing highly

standerized product with lowest cost because of economies of scale .. Appropraite where business have high market share…

2. differentiation (Differentiation Strategy) differentiating a product or service from the competitor's products

or services. The differentiation may be in the product form, the brand image, features, technology, customer service, pricing or distribution channels.

3&4. Focus Cost Leadership / Differentiation: When competition's range is narrow, in other words when target

on specific customer segment ,,will be focused cost leadership and differentiation strategy.

Source of Global competitive advantage

Adapting to local mar-ket differ-

ences

Exploiting economies of global

scale

Exploiting economies of global

scope

Tapping the optimal lo-cations for activities and re-sources

Maximizing knowledge

transfer across loca-

tion

1- Adapting to Local Market Differences

Companies must respond to the inevitable heterogeneity they will encounter in these markets.

The company should consider that there is adifferences in language, culture, income levels, customer preferences, and distribution sys-tems.

(a) Increased market share.

(b) Improved price realiza-

tion.

(c) Neutralizing local competi-

tors.

Adapting to lo-cal market dif-

ferences

Cont,,

Cont,,

(a) Increased market share:

Offering standard products and services across countries reduces the boundaries of the served market to only those customers whose needs are uniform across countries.

(b) Improved price realization:

- Tailoring products and services to the preferences of local customers enhances the value delivered to them.- A portion of this increased value should translate into higher price realization for the firm

2- Exploiting Economies of Global Scale

*Building a global presence automatically expands a company's scale of operations, giving it larger revenues and a larger asset base.

*Potential benefits of economies of scale in various ways: spreading fixed costs, reducing capital and operating costs, pooling purchasing power, and creating critical mass.

3- Exploiting Economies of Global Scope

Global scope refers to the multiplicity of regions and coun-tries in which a company markets its products and services.

(a) Providing coordinated services to global cus-tomers.

• A global supplier has the opportunity to understand the unique strategic requirements and culture of its global customer.

(b) Market power compared with competitors

4- Tapping the Optimal for Activities and resources Loca-tions

A firm that can exploit these intercountry differences bet-ter than its competitors has the potential to create signifi-cant proprietary advantage

(a) Performance enhancement.

(b) Cost reduction.

(c) Risk reduction.

5- Maximizing Knowledge Transfer Across Locations

(a) Faster product and process innovation.

(b) Lower cost innovation.

(c) Reduced risk of competitive preemption.

ة

3. Competitive Advantage By Porter

How a firm can actually

create and sustain a competitive advantage

in its industry?

Definition by porter

Competitive strategy :is about being different. It means de-liberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value.” -- Michael Porter (the father of compet-itive strategy)

3. Competitive Advantage By Porter

Two Basic Types

DifferentiationCost Leadership

Both can be more broadly approached or narrow, which results in the third viable competitive strategy

Approach 1 to Competitive advantage: Cost leadership

- A firm sets out to become the low cost producer in its indus-try.

- Note: a cost leader must achieve parity or at least proximity in the bases of differentiation, even though it relies on cost leadership for it’s CA.

- Note: if more than one company aim for cost leadership, usu-ally this is disastrous.

- Often achieved by economies of scale

- Examples of Cost Leadership: Nisson; Tesco; Dell

Competitive advantage model 2: Differentiation

- a firm seeks to be unique in it’s industry along some dimen-sions that are widely valued by buyers.

- Note: a differentiator cannot ignore it’s cost position. In all areas that do not affect it’s differentiation it should try to de-crease cost…

- differentiation can be applied: product, distribution, sales, marketing, service, image, etc.

Competitive advantage 3: Focus

*a firm sets out to be best in a segment or group of segments.

*variants: cost focus and differentiation focus.