Any corporate policy and plan which
is typical of the industry is doomed to
mediocrity
Bruce Henderson – former
Managing Partner of Boston
Consulting Group
If a man write a better book, preach
a better sermon, or make a better
mouse-trap than his neighbor, tho’
he build his house in the woods, the
world will make a beaten path to his
door.
Ralph Waldo Emerson
Company
Returns (%)
Oskosh Truck
36
Paccar
23
Johnson Controls
18
Ford Motor
7
General Motors
6
Median
6
Federal Signal
1
Fleetwood Enterprises
(6)
Tenneco Automotive
(11)
Federal Mogul
(38)
Exide Technologies
(50)
Table 5.1. 1993-2003 median returns of selected companies in the
US ‘motor’ industry (Source: Fortune.com)
There are two generic forms of competitive
advantage or positioning:
Cost advantage: a firm can do the same things as its
rivals but do so at a lower delivered cost, i.e. total
costs – not just product/service costs. Such firms
exploit economies of scale, scope and learning
(experience) effects and are obsessed with efficiency
and cost control.
Differentiation advantage: a firm offers something of
value that is unique or sufficiently better than rivals to
be seen as unique. These businesses create a form of
monopoly in that no other firm can deliver the same
product/service-based value to the target market. Their
obsessions centre on protecting and improving their
uniqueness in brand, product, process for instance.
Competitive strategic positions manifest
themselves in three ways:
1. The position a company adopts in terms of its
stance against competitors and its choice of buyer
segments as it attempts to fit with industry CSFs.
2. The source of value that is the primary driver of the
company’s offering.
3. The resources and capabilities underpinning that
value and the position of the firm.
Mintzberg’s four generic approaches to scope:
Unsegmentation: the firm offers the same products across
a broad range of market segments e.g. Coca Cola, WalMart, Google
Segmentation: the firm still addresses a broad range of
market segments but designs different products for those
segments, e.g. Honda, Dell, British Airways
Niche: the firm focuses on one segment of the market e.g.
Ryanair, Cray Computers, Morgan Cars
Customisation: the firm focuses on individual customers
and shapes their offering to the unique requirements of
that buyer, e.g. upmarket homes, event organization, golf
course design
Slack’s five advantage categories from Manufacturing
Advantage:
1. Quality advantage (or, “doing it right”);
2. Speed advantage (or, “doing things fast”);
3. Dependability advantage (or, “doing things on time”);
4. Flexibility advantage (or, “being able to adapt what you do”);
5. Cost advantage (or, “doing things cheap”).
Strategy
Description
Price (low cost)
A lower price than rivals
e.g. the no frills airlines verses the big carriers in the
US and Europe
Image
A brand or reputation
e.g. Coca cola, Mercedes, Gucci, Harvard Business
School, etc.
Support
Provision of back-up or after sales service
e.g. Dell
Quality
A more durable or reliable product or one with higher
performance
e.g. digital cameras (pixels)
Design
Different product functions
e.g. pharmaceuticals, mobile phones
Undifferentiation
Same as the others
e.g. Car rental firms, financial service firms, petrol
stations, steel companies etc.
Table 5.2 Differentiation strategies (Source: Mintzberg, 1998)
Resources and capabilities – the resource-basedview (RBV)
CASIS outlines how a resource/capability can provide a
competitive advantage for a company if it is:
1. Congruent with CSFs of the Industry +
2. Non-Appropriable +
3. Non-Substitutable +
4. Non-Imitable: +
a. Physically unique
b. Expensive to develop
c. Path-dependency
d. Causal ambiguity
5. Supported organizationally
1. Account for the rise of
Tesco’s.
2. Explain Tesco’s
strategic strength today.
3. What strategies might
J. Sainsbury have
pursued to combat
Tesco’s?

1. Could you define Ottakar’s
position on the back of a business
card?
2. Ottakar’s had generally taken an
evolutionary approach to change in
order to build on their existing
resources and capabilities…?
3. While Ottakars new websites
may have only constituted a
change to operational facilities how
might its operations and
performance ripple through the
organization and its strategic
positioning?
4. If you were James Heneage how
would you have responded to The
Sunday Times’ review?

1. Do you think that BMI’s
‘low-cost, full-frills’ position
could have provided them
with a competitive
advantage?
2. Will the advent of
BMIbaby help or hinder
BMI’s attempts to position
itself effectively?
3. How would you seek to
position BMI and
BMIbaby? Can you
express each of these
positions in eight words or
less?


1. Draw up a list of the key
questions that are critical to
understanding whether
Universal should enter the
UK market.
2. What data would you
need to aquire (and how
would you get it) to be able
to answer your questions?
1. Define Hugyhe’s
strategic advantage.
2. Define Interbrew’s
strategic advantage.
3. If you were a fund
manager which firm would
you choose to invest in?
Give reasons for your
answer.
4. What advice would you
give Huyghe and
Interbrew for the future?

1. Assuming you can get no
further information, what would
your overall intention for this
decision making process be?
2. Assuming you can get no
further information, what would
your first decision on furniture
be?
3. What then would your
strategy be as the rest of the
decision making process
unfolds?
4. What does this case and the
application of game theory
teach us about strategy?

1. Has IBB identified
imperfections in the
market, or is this really a
mirage?
2. How can IBB compete
with large well-resourced
incumbents?
3. Should IBB focus on
increasing its product
range (scope) or open new
branches?
4. Would the creation of an
online banking facility
help? Why?

1. What resources and
capabilities might Tayto’s
have that will be difficult for
Walkers to replicate?
2. If you were CEO of
Tayto’s, what strategies
would you employ to
protect the company’s
advantage?
3. If you were CEO of
Walker’s Ireland, what
strategies would you
employ to build the
company’s advantage?

1. Can you broadly draw
Komatsu’s strategic
position (or positions)
relative to Catapillar on the
generic strategy matrix?
2. What advantages might
this simple drawing provide
to Komatsu employees,
suppliers and distributors?
3. How might Catapillar
position itself in response
to Komatsu’s encircling
strategy, should Komatsu’s
strategy prove to be
successful?


1. Do you think Cereality
have a sustainable
competitive advantage? If
not, why not? If so how
would you articulate it?