Creating Competitive Advantage P. Ghemawat & J. Rivkin Cont’d. How does a firm identify opportunities to create competitive advantage Dumb (or smart) luck. Strategists Pankaj Ghemawat and Jan Rivkin appear in the HBR February edition. In it, they examine why large differences in economic performance exist, . Creating Competitive Advantage P. Ghemawat J. W. Rivkin December 22nd, Submitted By: Group A5 – Section A Ajay Bansal Alpesh Chaddha Aman.

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Nalebuff, Coopetition, New York: It also strives to generate more economic profits than the typical firm in its industry.

In crafting alternatives, managers tend to fixate on physical product characteristics and think too narrowly about benefits to buyers. The hiring, training, and compensation practices of Nordstrom create a helpful, outgoing sales staff that permits the department store to charge a premium for its clothes.

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Within-industry differences in performance are often larger than differences across industries, but it would be wrong to conclude that industry analysis is unimportant. Managers should understand if the savings are larger than the reduction in sales. Of course, this is a general pattern that may or may not hold up in a particular setting.

Porter, Competitive Strategy, New York: First, to create an advantage, a firm must configure itself to do something unique and valuable. When considering changes in activities, it is crucial to consider competitor reactions. Activity Analysis of Cost and Willingness to Pay The Tension Between Cost and Willingness to Pay 10 Widening the wedge is difficult because, often, a firm must incur higher costs in order to deliver a product or service for which customers are willing to pay more.


A firm whose choices are internally inconsistent is unlikely to succeed. Of course, this alternative process 37 works best when managers start with a good grasp of the options available to them.

To introduce the concept, we use the example 9 of the portal crane business of Harnischfeger Industries.

CREATING COMPETITIVE ADVANTAGE (P. Ghemawat, J. Rivkin, HBR, ) « Readings and Learnings

More subtly, a firm can boost willingness to pay through activities associated with sales or delivery—the ease of purchase, speed of delivery, availability and terms of credit, convenience of the seller, quality of presale advice, etc. Some have argued that dual advantages are rare and are typically based on operational differences across firms that are 14 easily copied.

It emphasizes two themes: When we say that a firm has differentiated itself, we mean that it has boosted the willingness of customers to pay for its output—that it can command a price premium. Figure 9 shows such an analysis for the snack cake market. In the remainder of this note, we focus on the analysis of actual costs.

MA as competitive adva By shipping clothes on the proper hangers and in certain containers, the manufacturers can greatly reduce the labor and time avantage to get clothes from the department store loading dock to the sales floor. Creating Competitive Advantage Suppose now that Harnischfeger discovers a way to add some new services to its core product.


We assume, in essence, that supplier opportunity costs and actual costs track one another closely.

Harvard Business School Press, Analyze Relative Costs Each activity generates costs. As firms increasingly sell services and transact on the basis of knowledge, these 25 outdated systems make it harder and harder to analyze costs intelligently.

Creating Competitive Advantage !

Creating Competitive Advantage

In doing so, the management team must decompose the firm into parts, but also advantsge a vision of an integrated whole. How SocialMedia Marketing Changed in bit.

advantag Among those customers who want J. How does a firm identify opportunities to create competitive advantage Dumb or smart luck Entrepreneurial insight Analysis can hone insight Activities undertaken to: Figure 6 shows the value chain of an Internet start-up that sells compact discs online and ships them by mail to customers. Finally, the nature of the product tivkin logistics costs: Regardless, it is clear that there is a rich variety of ways to resolve the tension between cost and willingness to pay favorably.