2006-02-17 02:28:13Yu Yi, TSAI
All strategy is LOCAL
All strategy is LOCAL
In market without barriers, competition is intense.
Avoid competition that leaves every participant worse off is an especially enlightened choice, and one that deserves to be called “strategic”
Competitive advantage is something a firm can do that rivals can not match. It either generates high demand or leads to low costs.
“Demand” competitive advantage gives firm unequaled access to customers. Customer captivity generally arises from customers’ habits, searching costs, or switching costs.
“ Cost “ advantages, always come down to a superior technology that competitors can not duplicate-because it is protected by a patent or declining the marginal cost that competitors can not match.
3 major factors: Economic scale, customer captivity, proprietary technology
Others: Technology advantage, government protection,
Operational efficiency is not competitive advantage. Because it can be adopted by other companies. A company’s best and most innovative use of information technology, business models, financial engineering, and almost everything else that applies to operations suffer from same availability to rivals. What a firm can do, its competitors can do as well.
Sustainable dominance-economic scale
For the pharmaceutical company, the comprehensive global networks of locally dominant entities can be formed by several means, including licensing, joint ventures and cross border mergers.
Local economies scale in advertising and distribution are the important competitive advantage for all these companies specially when combined with habit based customer captivity.
The more local a company’s strategy are, the better the execution tend to be.
In market without barriers, competition is intense.
Avoid competition that leaves every participant worse off is an especially enlightened choice, and one that deserves to be called “strategic”
Competitive advantage is something a firm can do that rivals can not match. It either generates high demand or leads to low costs.
“Demand” competitive advantage gives firm unequaled access to customers. Customer captivity generally arises from customers’ habits, searching costs, or switching costs.
“ Cost “ advantages, always come down to a superior technology that competitors can not duplicate-because it is protected by a patent or declining the marginal cost that competitors can not match.
3 major factors: Economic scale, customer captivity, proprietary technology
Others: Technology advantage, government protection,
Operational efficiency is not competitive advantage. Because it can be adopted by other companies. A company’s best and most innovative use of information technology, business models, financial engineering, and almost everything else that applies to operations suffer from same availability to rivals. What a firm can do, its competitors can do as well.
Sustainable dominance-economic scale
For the pharmaceutical company, the comprehensive global networks of locally dominant entities can be formed by several means, including licensing, joint ventures and cross border mergers.
Local economies scale in advertising and distribution are the important competitive advantage for all these companies specially when combined with habit based customer captivity.
The more local a company’s strategy are, the better the execution tend to be.