DQE
Is DQE the base of competitive advantage?
Prof. Spyros Lioukas, Dr Irini Voudouris
Athens University of Economics and Business
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
1

DQE
Learners will
• Understand the meaning of competitive advantage
• Understand what are the main types of competitive advantage
• Identify “how” competitive advantage may be created
• Recognize the basis of sustainable competitive advantage
• Distinguish the “new” bases of competitive advantage
• Identify how the DQE approach enhances the creation of sustainable competitive advantage
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
2

DQE
– … a basis for the firm’s long term success?
– … a basis for value creation?
• Do we really know where it resides?
• Can it be sustainable?
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
3

DQE
“ When two or more firms compete within the same market, one firms possesses a competitive advantage over its rivals when it earns a persistently higher rate of profit
(or has the potential to earn a persistently higher rate of profit)”
R. M. Grant, 2000
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
4

DQE
Competitive advantage
The main types of
Competitive Advantage
Cost advantage
Differentiation advantage
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
5

DQE
Market
Competitive strategies by Porter
Types of competitive advantage
Low cost Differentiation
Industry-wide
Cost leadership
Differentiation
Niche Focus with low cost
Focus with differentiation
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
6

DQE
Types of competitive advantage
Low cost Differentiation
Industry-wide
Cost Leadership Differentiation
Market
Niche”
Hybrid Strategy
Focus with low cost
Focus with differentiation
 “ Inbetween” there might be a successful strategy (Value for Money)
 Hybrid strategies can be more effective
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
7

DQE
Features of competitive strategies
Cost Leadership
 Efficient scale
 Standardization
 Design for low production cost
 Control of overheads and R&D
 Avoid marginal customers
Differentiation
 Q uality
 Innovation
 D esign
 Credibility
 Brand name
 Reputation
 E nvironmental posture
 Customer service
 Integrated services
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
8

DQE
• What is meant by sustainable competitive advantage?
– Durable
– Valuable to the firm
• Exploiting weaknesses and neutralizing threats
– Unique
– Difficult for competitors to imitate
– Not easily substitutable
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
9

DQE
• Increased competition leads to decrease of differences in competitive advantage
• Standardization/ mass production of unique features: What can be left for differentiation?
• Unique features of differentiation become prerequisites for survival
• Dynamism & complexity of the environment
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
10

DQE
– Develop resources and capabilities, which are rare, valuable, non-tradable,
– Make those resulting competences sustainable by precluding imitation or substitution by competitors
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
11

DQE
Sustainable competitive advantage
…based on capabilities
Innovation
J. Kay’
Reputation
Architecture of relationships
Strategic assets
DQE
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
12

DQE
Quality
Source: “Competitiveness: Strategies of the best UK companies”, Winning DTI-CBI
Low cost
Operational performance
Delivery time
Creditability
Prerequisites
Product Service
Design
Marketing
Customer service
Customized product
Reputation
Innovative product
Elements of differentiation
Quality
Low cost
Oper. performance
Delivery time
Creditability
Product Service
Design
Marketing
Customer service
Customized product
Reputation
Innovative product
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
13

DQE
Sustainable competitive advantage
…reflected on product
 Quality and quality of customer service
 Design
 Innovative product
 Customized product with integrated services
 Environmental friendly
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
14

DQE
• R.M. Grant, Contemporary Strategy Analysis ,
Blackwell Publishers, 2000.
• M.E. Porter, Competitive Advantage , New York: Free
Press, 1985.
• J. Kay, Foundations of Corporate Success , Oxford
University Press, 1995.
• G. Johnson, K. Scholes & R. Whittington, Exploring
Corporate Strategy, Prentice Hall, 7 th eds, 2005
• C. Prahalad & G. Hamel, “The core competences of the corporation”, Harvard Business Review, vol. 28, n.3, may-june, 1990.
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
15

DQE
• S. Marthur, “How firms compete?” The Journal of
General Management , vol.14, no 1, autumn 1988.
• F. Tilley, P. Hooper & L. Walley, “Sustainability and competitiveness: Are there mutual advantages for
SMEs?”, in J. Oswald & F. Tilley, Competitive
Advantage in SMEs: Organising for innovation and change, Wiley, 2003.
• K. Weigelt &C. Camerer, (1988), “Reputation and
Corporate Strategy: A review of recent theory and applications”, Strategic Management Journal , 9
Towards the Sustainable Region /DQE / 2NOO27I
Project co-financed by the Structural Funds
16