Competitive Advantage
Katerina Zacharia
Competitive Advantage
Creates a moat around a business such that it can
keep competitors at bay and reap extraordinary
growth and profits
Whitney Tilson, 2000
The way an enterprise determines its positioning
in the market in relation to its competitors
© Katerina Zacharia June 2007
Defining Process
1. Identify the company’s core
competency
 Conduct SWOT Analysis
 What does the enterprise do best?
 Ex. Operational excellence
 Ex. Customization
 Ex. Price and convenience
© Katerina Zacharia June 2007
Defining Process
2. Research competitive landscape
 Identify competitors
 Conduct competitive analysis
© Katerina Zacharia June 2007
Competitive Analysis
Analyze key variables
Product mix
Service offerings
Pricing
Brand: perception of quality
Packaging
Distribution
© Katerina Zacharia June 2007
Defining Process
3. Determine the value proposition
 Clear statement of the tangible results a
customer gets from using your products
or services
 Perceived benefits to the customer
 The more specific your value proposition
is, the better
© Katerina Zacharia June 2007
Defining Process
Identify competitive advantage
Can the firm provide a long-term
advantage that is not easily replicated?
© Katerina Zacharia June 2007
Key Point
Value proposition
 Defined from the customer’s perspective
Competitive advantage
 Defined from the firm’s perspective
© Katerina Zacharia June 2007
Guess the value proposition?
© Katerina Zacharia June 2007
Value Proposition
Walmart
Price
Microsoft
Ease of use, accessible
Dell
Customization
Coca Cola
Brand, taste
Apple
Unique products, design, usability
McDonald’s
Convenience, consistence
Mercedes
Luxury, quality
Starbucks
Customization, quality, consistency
© Katerina Zacharia June 2007
Define competitive advantage
© Katerina Zacharia June 2007
Competitive Advantage
Walmart
Price/Convenience/Buyer Power
Microsoft
Pervasive, Product Offering
Dell
Price and Service
Coca Cola
Distribution
Apple
McDonald’s
Product differentiation, innovation
Market drivers
Operational Excellence (consistency)
Mercedes
Quality
Starbucks
Brand and service
© Katerina Zacharia June 2007
Classroom Activity
In groups of 4:
List top five favorite music artists
Define value proposition
Determine competitive advantage
© Katerina Zacharia June 2007