Creating Competitive Advantage Pankaj Ghemawat Pdf ((INSTALL))
The literature on strategy is crammed with accounts of why a sustainable competitive advantage is A Good Thing To Have. But all those accounts beg two key questions: Which advantages tend to be sustainable, and why?
Creating Competitive Advantage Pankaj Ghemawat Pdf
Access will lead to a sustainable advantage if two conditions are met: it must be secured under better terms than competitors will be able to get later, and the advantage has to be enforceable over the long run. Enforceability can come from ownership, binding contracts, or self-enforcing mechanisms such as switching costs. Without enforceability, the terms of access shift in line with overall market conditions, wiping out any competitive differences.
An obvious but important point: know-how must be kept secret if it is to yield an advantage. Many high-tech and service companies have been devastated by the defection of key personnel in whom their know-how is vested. The Boston Consulting Group, for instance, has suffered more than a dozen spin-offs, eroding its competitive advantage in management consulting and its client base. Other sources of leaks include suppliers, customers, reverse engineering, and even patent documents.
1. Managers cannot afford to ignore contestable advantages. For one thing, even moves that offer ephemeral advantages may be worth making, if only to avoid a competitive disadvantage. For another, some contestable advantages may survive uncontested: disadvantaged competitors may be tied up trying to meet their profit targets, constrained by their corporate strategies, or just ineptly managed.
A firm such as Schering-Plough that earns superior, long-run financial returns within its industry is said to enjoy a competitive advantage over its rivals. This note examines the logic of how firms create competitive advantage. It emphasizes two themes: First, to create an advantage, a firm must configure itself to do something unique and valuable. The firm must ensure that, were it to disappear, someone in its network of suppliers, customers, and complementors would miss it and no one could replace it perfectly. The first section uses the concept of "added value" to make this point more precisely. Second, competitive advantage usually comes from the full range of a firm's activities--from production to finance, from marketing to logistics--acting in harmony. The essence of creating advantage is finding an integrated set of choices that distinguishes a firm from its rivals. The second section shows how managers can analyze the full range of activities to understand the sources of added value.
Strategists Pankaj Ghemawat and Jan Rivkin appear in the HBR February 2006 edition. In it, they examine why large differences in economic performance exist, and how competitive advantage may be created.
Second, competitive advantage usually comes from the full range of a firm's activities--from production to finance, from marketing to logistics--acting in harmony. The essence of creating advantage is finding an integrated set of choices that distinguishes a firm from its rivals. The second section shows how managers can analyze the full range of activities to understand the sources of added value.