creating advantage module 3 and sca
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Creating Advantage: Synergy and
vision versus Opportunities
Sustainable Competitive
Advantage
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SCA
It is an element or combination of elements ofthe business strategy that provides a meaningfuladvantage over both existing and future
competitors. Wal-Mart has a cost advantage because of its
scales .
Southwest Airlines has a fun personality and a
point to point model.
Dell computers efficient direct sales model makescustomized computers.
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Sustainable competitive Advantage
The Way you compete
Product strategy
Positioning Strategy
Manufacturing Strategy
Distribution Strategy
Basis of Competition
Assets and compete
What you offer
Value Proposition
Where you compete
Product market selection
Competitors selection
SCA
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Basis of Competition Asset and
Competition
Assets and competencies are the mostsustainable elements of a business strategybecause they are difficult to counter.
What you offer
the value proposition
An effective SCA should be visible to customers and
provide value position.
A product reliability is not visible to customers but it should
be made visible through advertising or product design, leads
to reliability positioning strategy. E.g. Gillette maintain
technological superiority.
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A solid value proposition can fail if a key
ingredient is missing.Procter and Gamble Pringles Potato chips had a
host of assets, such as consistent product,
long shelf life, a crushproof container, andnational distribution. The problem was that
these attributes were valued only if the taste
was perceived to be good. As a result, Pringles
ability to penetrate the snack market was
limited for decades until it made progress in
term of both actual and perceived taste.
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How are Pringles made?
Company facts:- We're glad you noticed that Pringles
are shaped differently and taste different. While
Pringles contain the same basic ingredients found in
other chip products, we take a totally radical
approach to the way we mix our ingredients. We buy
potatoes in the form of potato flakes and then addjust enough water and other wholesome ingredients
to make a smooth potato dough. The dough is cut in
uniform shapes and these cut-outs are placed on
pre-formed and Pringles-shaped carriers. The crispsare quick-fried and seasoned just right. Finally, they
go to the stack-packer and then on to your favorite
store.
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In most areas of the world local health regulations
require that food cannot sit under a heat lamp for
more than 16 minutes before it is deemed
inconsumable by the public. It is at this time interval
that one of the largest suppliers of fast food for the
world supplies one of the largest manufacturers of
potato chips their base ingredient. McDonald'scarefully collects unserved French fries and places
them into specially created dehydrators. The remains
are then flaked and placed into airtight containers
which are then shipped to Pringles factories all overthe world.
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Where You compete: the Product
Market Served
The important determinant for SCA is the
choice of the target product market.
A well-defined strategy supported by assets
and competencies can fail because it does not
work in market place.
One way to create market place value is to be
relevant to customers.
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Canada Dry : RIP ( 1995-1999)
Brand : Canada Dry
Company : Cadbury Schweppes ( Later Coca Cola)
Agency : Mudra Canada Dry was launched in India in 1995. The
brand ,from Cadbury Schweppes ,was a highly
popular brand of softdrinks across the globe.
Canada Dry was a much hyped brand because
it was from the house of Cadbury. Cadbury
Schweppes launched Canada Dry and Orange
Crush in the Indian market with much fanfare.Canada Dry was a Champagne Softdrink.
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The brand has positioned itself as a champagne and the
taste was different and refreshing.
The brand was also promoted heavily in various
media. The ad featuring the snow and tiger brings
back the nostalgia about this brand. The brand was
positioned as a premium coldrink . The brand gained
immediate acceptance because of its associationwith Cadbury. The brand had the potential to
become a premium softdrink brand in India.
But alas, the brand did not last too long in the
market. In 1999 CocaCola took over the beveragesbusiness of Cadbury Schweppes and like GoldSpot
and Limca , Coke killed this brand.
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It is sad to see such brands being killed for no
reason connected with customers. The only
reason for Coke to kill these brands was to
make way for Coke's original brands. In the
case of Canada Dry , the brand only had a
negligible presence in the Indian market.
Look at the Indian market now - Is there a
premium soft drink brand in India ? Neither
Coke or Pepsi was able to create a premiumsoft drinks category in India. They have not
even tried yet.......
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SCA Versus Key Success Factor
SCA
It is an assets or
competence that is the
basis for a continuingadvantage. E.g. Hyundai
ability to be superior than
competitor
Key Success Factor
It is an asset or competence
needed to compete. E.g.
distribution network forautomobile.
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What business managers name as
Their SCAs Reputation for quality
Customer service/product support
Name recognition/high profile
Retail good management and engineering staff Low-cost production
Financial resources
Product line breadth
Effective sales force
Market Share
Product characteristics/differentiation
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Strategic Option- Routes to an SCA
Quality
Product attributes
Product design
Product Line
Breath
Corporate
Social
Responsibility
BeingGlobal
Innovation
Focus
value
Customer
intimacyBrand
Familiarity
Strategic
Option
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Synergy between business units
can provide an SCA.
Synergy means that the whole is more than
the sum in parts. But here it means that two
businesses or two product-market strategies
operating together will be superior to thesame two business operating independently.
The result is increased customer value and
increased sale, lower operating cost, Reducedinvestment.
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Market/submarket
Ford Figo A thousand Ford engineers workedto build the Figo. It has sold 30,000 units in 25
weeks and will be sold in 50 countries
including Mexico, North Africa and the Middle
East.
Toyota Etios: At least 2,000 engineers from
India and Japan worked for over four years on
the low-cost car. Etios will be launched inBrazil, South Africa and China.
Nokia learn English Application- the service,
developed for the Indian market, has
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6 million user worldwide. The company is
looking to take its new consumer, such as the
Hispanic population in the U.S. it also plans toreplicate its tie-up with IGNOU globally.
Nestle Maggi Masala-ae-Magic: the high
nutrient and the low cost variant of Magginoodles developed for the rural poor in India
& Pakistan, is on its way to Australia and New
Zealand. Pepsi Kurkure and Nimbooz- After tasting
success in India, PepsiCo plans to launch these
products globally.