Tirthankar Sutradhar

Generic Building Blocks of Sustainable Competitive Advantage

When two or more firms compete within the same market, one firm possesses a competitive advantage

over its rivals when it earns (or has the potential to earn) a persistently higher rate of profits

Pruning the portfolio• Dell became really successful by exploring the web as a distribution channel.• Gillette has made a fortune by establishing a continuous relationship with

customers based on its disposable razors.• Apple resurged based on its core capacity of bringing design to computers and

electronic gadgets.• Cisco became famous for its capacity of configuring activities in new and

innovative supply chains.• Intel thrived for its capacity to get partners to build on its processing platform.• Google tapped in an innovative revenue streams by linking highly specific search

results and content with text ads.• Wal-Mart became dominant by its ability to slash cost throughout its business

model.

Evolution of Competitive Advantage

Emergence of Competitive Advantage

4 Building Blocks of Competitive Advantage

The Main Types of Competitive Advantage

Cost advantage

Differentiation advantage

Competitiveadvantage

Similar product

at lower cost

Higher price

for unique product

Once establishes, competitive advantage is eroded by competition. The speed with which competitive advantage is undermined depends on the ability of

competitors to challenge either by imitation or innovation

Sustainable Competitive Advantage

What is meant by sustainable competitive advantage?

• Durable• Valuable to the firm

• Exploiting weaknesses and neutralizing threats• Unique• Difficult for competitors to imitate• Not easily substitutable

Sustaining Competitive Advantage

Sustained competitive advantage comes from maintaining higher profits than competitors over long periods of time.

The Coca-Cola Business Model• Coca Cola is the best example of a company with sustained competitive

advantage, innovation, an extensive business model and an intelligent and substantial distribution network.• The Coca-Cola Company was incorporated in 1892 to produce the sweet fizzy

drink – first developed by a pharmacist – that has become the world’s most recognised brand.• Today, almost 120 years later, The Coca-Cola Company is still going strong and is

one of the most sought-after stocks on the New York Stock Exchange.• Coca-Cola’s competitive advantage has proven its sustainability over the last 100

years.

Competitive Advantage of Coca-Cola• The secret recipe for Coca-Cola, which arguably tastes better than other cola

drinks.• Their ability to continue developing new products and re-inventing old ones –

Coca-Cola currently offers over 400 brands in 200 markets worldwide.• The world’s most comprehensive distribution system has made Coca-Cola

accessible to billions of people worldwide. Coca-Cola is often available in ample supply to people in areas where other consumer goods companies would never consider delivering their products. The African continent is an excellent example – it’s fairly common to see a small shop selling cold Coke in the middle of nowhere.

• Coca-Cola’s production techniques are so well developed that it costs a fraction of the selling price to manufacture their product, resulting in high profit margins.

Bottling

1886

Coca Cola

BORN

1891

Coca Cola’s first

BOTTLINGIn a drug store occurred

1899

The first bottling

was doneAGREEMENT

1909

400 Coca-Cola plants

were operatingBOTTLING

1930

The company started moving

GLOBALY

1960

New

BRANDSwere Introduced

And the rest is History

Coca-Cola was made for the cure ofheadache

and other illnesses

Sales for the first year were only

$50

Only 9servings of the soft drink were sold

each day

Now number of coke bottles sold each day

1.8 billion

is theCoca-Cola

most recognized word in

Okaythe world after

162 B 115 BIn 2012

Enterprise Value

In 2012

Total GDP

Total number of Coca-Cola Products

3,500

Number of worldwide Coke employees

150,900

Pruning the portfolio

Performance Distribution Network

Another well-known example of a company with a sustainable competitive advantage is Walmart

Competitive Advantage ofWalmart maintains a sustainable

competitive advantage in part because its strategies are specific to its

organization and these strategies are known for creating a gap between

Walmart's performance and that of its competitors.

Walmart has created a complicated and detailed distribution center network which

allows it to move goods to stores more quickly and efficiently than its competitors,

while maintaining prices lower than its competitors.

Pruning the portfolio

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