5. Competitive advantage - YouTube Videos - MODULE 3 - Home

Competitive Advantage Explained - SCM Group Project - Video 1

Transcript

A competitive advantage is the key to any company’s success as it helps a firm achieve both market and financial superiority over competitors. When developing a competitive advantage companies must understand customer needs and expectations and design a value chain can deliver an attractive customer benefit package to customers. Management will then leverage operational capabilities to support competitive priorities. Competitive  priorities for a company can include cost, quality, time, flexibility, and innovation. IN-N-OUT competitive priorities are cost, quality, and time as demonstrated by the interactions following we show how through  understanding competitive priorities a company can maintain a competitive advantage. 

A: There are so many different places to eat out that always have a hard time knowing which one to choose.

B: What are you in the mood for today? 

A: I am really craving a good burger. 

B: There's a great burger place called “IN-N-OUT” pretty close to here, they have the best sauce on their burgers and it  always fresh. 

A: is there anywhere else I could go? 

B: You can also go to McDonald’s to get a burger similar, but for cheaper price. The quality is not the same but it may be worth it save some money.

A: I think I will give IN-N-OUT a try. Thanks for the recommendation!

There are plenty of potential customers in the market. This is the opportunity that is needed to achieve a competitive advantage. As a business, it is important to continually make business decisions based on matching opportunities like this to the company’s skills. When a manager is trying to determine and maintain their competitive advantage in the market, they must first realize what the order qualifiers are and then expand on their product with order winners. Order qualifiers are the basic customer expectations and are the minimum performance level required for a company to stay in business. In the case of IN-N-OUT this would a generic cheeseburger with just meat, cheese, tomato, and lettuce. Order winners are the features of a good service that differentiate their customer benefit package from another, and as a result when the customers business. For IN-N-OUT this would be the addition of grilled onions, pickles, their world-famous spread or animal style to their burgers. According to the text in order for a company to stay competitive companies must continually innovate and improve on their customer benefit packages, however disproves IN-N-OUT this with sticking to their traditional and simple menu yet continuing to improve upon their sales year after year. 

B: Hey how did you like IN-N-OUT the other day? 

A: It was great! I got my food super quick. it tasted so amazing that I almost forgot I spent less than five dollars on the burger. It's no wonder they were so busy when I got there.

B: IN-N-OUT has always had competitive advantage in the market. They continually delivered quick service, inexpensive burgers, and fries and all while maintaining a high quality.

A: Yeah, the quality of the burgers was like nothing I have ever experienced at a fast food restaurant.

According to chapter 4s definition of core competencies. IN-N-OUT would be the quick service, inexpensive meals, and high quality goods. Business Insider says, “losing competitive advantage is the greatest risk in business, and that is where a business should focus”. In order to maintain a competitive advantage IN-N-OUt must continue to match their core competencies to the opportunities in the market.

B: IN-N-OUT price themselves on providing customers with nothing, but the highest quality of food. In fact, IN-N-OUT refuses to open any new restaurant unless it is within a 500-mile radius from where they receive their best products because they want to ensure their customers have the freshest food available.

A: Wow that is really amazing and the employees were also nice. 

B: And that is the kind of service you will get every time you go regardless of what location you go to. IN-N-OUT treats their employees very well and they are paid a competitive pay, and it shows in their service, especially the managers of IN-N-OUT. They are able to make a salary of six figures without even having a college degree. 

A: What a great company! The way they treat their employees really shows how much they value them, and their customers. 

B: That is very true, and did you notice how simple their menu was?

A: Yes I did, I really liked that. It really gave me the impression that I was at a traditional burger restaurant. 

B: Right, IN-N-OUT has had the same menu for years and doesn't plan on changing it.

Based on this interaction, it is obvious that IN-N-OUT knows their competitive priorities and realizes that quick service, inexpensive cost, while maintaining high quality goods is the recipe for their success. 

While most companies build competitive advantages through implementing new business techniques, IN-N-OUT does the exact opposite. IN-N-OUT sticks to what they know and continues to excel at it. Their dedication to simplicity is what has allowed them to be so consistent, rather than continuously rolling out new items to the menu and trying different promotional offers customers can rely on IN-N-OUT to provide an experience that is both, dependable and of high quality for a reasonable price.

Retrieved from: https://www.youtube.com/watch?v=Qxwt3-DNo_s

What is Competitive Adventage? What does Competitive Advantage mean? - Video 2

Transcript

Competitive advantage is a business concept that describes the attribute of allowing an organization to outperform its competitors. These attributes may include access to natural resources such as: high grade ores or a low-cost power source, highly skilled laborer, geographic location, high entry barriers, etc, access to new technology can also be considered as an attribute of competitive advantage. Competitive advantage is the leverage that a business has over its competitors. This can be gained by offering clients better and greater value. Advertising products or services with lower prices or higher quality interest consumers. Target markets recognize these unique products or services. This is the reason behind brand loyalty or why customers prefer a particular product or service over another. Value proposition is important when understanding competitive advantage. If the value proposition is effective it can produce a competitive advantage in either the product or service. The value proposition can increase customer expectations and choices. 

Michael Porter defines the two ways in which an organization can achieve competitive advantage over its rivals, cost advantage and differentiation advantage. Cost advantage is when a business provides the same products and services as its competitors albeit at a lesser cost. Differentiation advantage is when a business provides better products and services as its competitors. In Porter’s view, strategic management should be concerned with building and sustaining competitive advantage. Competitive advantage seeks to address some of the criticisms of comparative advantage. Competitive advantage rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy. 

The other theory, “comparative advantage” can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade. Competitive advantage attempts to correct this issue by stressing on maximizing scale economies in goods and services that garner premium prices stocks and Wharf 2009. The term competitive advantage refers to the ability gained through attributes and resources to perform at a higher level than others in the same industry or market. Christensen in Fatih(2:43) 1984, Kay 1994 Order(2:46) 1980 cited by Shekhar Batty and Lint 1999 P 45, the study of this advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in today's competitive market. A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player. Barney 1991 cited by Criollo FAL da 2.0, 03 P 221, successfully implemented strategies will lift a firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players pass immers and call on Tony (3:35) 2000 P, 18 to gain competitive advantage a  business strategy of a firm manipulates the various resources over which it has direct control and these resources have the ability to generate competitive advantage. Radim Phillippi 1990 cited by region Anthea Neena 2003, P 362 superior performance outcomes and superiority and production resources reflect competitive advantage. Dan in wesley 1998 cited by Lao 2002 P, 125 the quotes above signify competitive advantage as the ability to stay ahead of present or potential competition. Also, it provides the understanding that resource is held by a firm and the business strategy will have a profound impact on generating competitive advantage. Paul 2001, P 132 views business strategy as the tool that manipulates resources and creates competitive advantage, hence viable business strategy may not be adequate and lack of possesses control over unique resources that have the ability to create such a unique advantage.

Retrieved from: https://www.youtube.com/watch?v=-JfWsYLJMlU

Alternative Competitive Advantage - Video 3

Transcript

This mini lecture provides a high-level overview of an alternative characterize the main approaches to achieving a competitive advantage. Cost leadership and differentiation are two common ways to characterize generic strategies, but they are not the only ways to characterize competitive advantages. A different approach was suggested by Michael Tracy and Fred Wiersema in their popular 1995 book called “The Discipline of Market Leaders”. They categorize competitive advantages into three fundamentally different types according to whether the focus of the advantage is on achieving superiority through unique expertise in the process, the product, or the customer. 

Companies that focus on process are called “leaders in operational excellence” In other words these companies operate in ways that allow them to deliver similar products as rivals but at lower prices and or greater convenience. These companies raise the bar of competition by constantly pushing the limits on efficiency in their systems, processes, and supply chains. Thus, these companies tend to set new standards in their industries for a minimal cost, minimal waste, and our maximum convenience. This level of efficiency usually requires highly standardized and centralized operations. A great example of a company that focuses on process is Motel 6, a classic example of an operationally excellent hotel chain. The motel 6 corporate profile declares that the company’s goal is quote clean comfortable rooms at the lowest price of any national chain. In the 1960s Motel 6 pioneered the first real budget motel designer for the no-frills traveler. Indeed, the name of Motel 6 came from the original 1962 price, just six dollars per night. The promise of the best price at any national chain in a clean comfortable room are Motel 6 virtues. For years motel 6 was a household name, synonymous of quality and value. Indeed Motel 6 enjoyed for many years the highest brand recognition factor of any budget lodging brand. Companies that focus on the product itself are called “product leaders”. The fundamental goal of a product leader is to have a truly distinctive and superior product. The price is charged  by a product leader are no great bargain and  the service may be nothing special either, but these factors are more than compensated for by the superior performance or features of the product itself.

Indeed product leaders raised the bar for competitors by constantly pushing the limits of product performance. Product leaders tend to set new industry standards for technology, style, features and/or speed achieving this requires a passion for imagination, invention, and innovation as well as heavy investment in R&D and new market exploration. Whereas an operational excellence leader usually uses a standardized and centralized organization with tough penalties to eliminate waste. A company pursuing product leadership usually takes the opposite approach. A product leader needs a loose flexible fluid organizational structure in order to adapt to the constantly evolving new product initiatives and must find a way to reward product successes without punishing all the many failed experiments that are needed in order to find those few rares successes. Product leadership also requires the organizational flexibility to adapt quickly to new product initiatives. BMW is a classic example of a company that is focused on product leadership. BMW is advertising portrays its product as the ultimate driving machine. BMW trumpets features like superior acceleration, handing responsiveness, and fuel efficiency. So BMW is all about making engineering number one above everything else. Even if that makes cost and service secondary.

Let’s come back to the hospitality industry for another example. W hotels part of Starwood is a classic example of a hotel chain focused on differentiating the product itself, the obvious advantage is all about the unique style of the physical hotel itself, calling itself quote storybook of style. The W hotels website describes the company as follows quote the difference with W is in the details: inspiring, ironic, innovative, influential from our inception W Hotels has approached its spaces with both, design and comfort  in mind. Immediately as guest makes his or her entrance into our living room, the flirtation begins as lighting a signature are sensed. Art and music transform the moment. So you can see from this description that W hotels is focused on distinguishing itself through the product. It is a product leader.

The third category is customer intimacy. A company that leads in customer intimacy distinguishes itself through outstanding service and by providing the best total solution tailored to each customer’s unique needs. The price is charged by a customers intimacy focused company are not bargained and although its products may be excellent, it will not be the very best performing product in the market, nor will it be the most distinctive or cutting edge product, but these factors are more than compensated for by the superior service that the customer intimacy leader uses to anticipate understand and fully meet the needs of each carefully selecting customers. The ultimate goal of customer intimate company is to create a lifelong bond with its customer, even if that means sacrificing the short-terms profitability of the current transaction. Achieving the superior level of customer intimacy requires an extreme level of delegation and decentralization, so that decisions are always made by the employee who is closest to the customer. It also requires information systems that help employees keep track of each customer’s unique needs, tastes, and preferences such as the personal book database maintained by Nordstrom. As the name suggests this system was originally a simple paper book kept in the store to keep track of each customer’s past purchases, but today it is a powerful system that enables any Nordstrom associate to say, “welcome back Mrs. Wilson we just got some beautiful floral print scarves that would be perfect match for the yellow blouse you bought six months ago, and can I help you find something for your husband's birthday next week?” Again let's look to the hospitality industry for an example of customer intimacy, Ritz Carlton takes the pursuit of customer intimacy to the highest level of any hotel chain. The official credo of Ritz Carlton says, “the Ritz Carlton hotel is a place where the genuine care and comfort of our guests is our highest mission, we pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm relaxed yet refined ambiance” the Ritz Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests. Even beyond this company credo all Ritz Carlton employees are also required to adhere to twelve services values, and the first seven of these service values are direct expressions of customer intimacy. Those seven service values are as follows:

1. I build strong relationships and create Ritz-Carlton guests for life.
2. I am always responsive to the expressed and unexpressed wishes and needs of our guests.
3. I am empowered to create unique, memorable, and personal experiences for our guests.
4. I understand my role in achieving the key success factors in creating the Ritz Carlton mystique.
5. I continuously seek opportunities to innovate and improve the Ritz Carlton experience.
6. I own and immediately resolve guest problems.
7. I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.

So you can see Ritz Carlton is a classic example of a customer intimacy focused company. Now there are clearly some connections between this categorization and the more common categorizations of cost leadership versus differentiation. We can imagine that an operationally excellent company may also be a cost leader. Likewise a product leader may also be a differentiator. However, customer intimacy focused companies are also differentiators in a sense because they differentiate through customization rather than through price equality. 

The purpose of this mini lecture is not to suggest that the cost leader versus differentiator categorization is not valid. It’s simply to introduce an alternative way of categorizing strategies. In summary, an operationally excellent company simply does what they do more efficiently than anyone else. A product leader offers the best product available, and a customer intimacy focused company gives the customers exactly what they want. Finally, the three value disciplines of operational excellence product leadership and customer intimacy give us a critically important tool for our strategy toolkit. They helped us to identify whether or not a company has a strategy and, if so, what type of strategy? How can they do this? Whenever I meet someone from a company that I'm unfamiliar with and I want to learn more about that company, I always start by asking one deceptively simple question that can be a tool in your strategy toolbox: why do your customers choose your company over every other competitor in the market? You can tell a lot about the company from the answer to this one question. The answer to this one question can give you a pretty good idea about whether or not the company really has a true strategy, and if so, which are the three value discipline that strategy falls into? Answers like, “we are cheaper, more convenient, more efficient, and so forth”, likely indicate an operational excellence leader. Answers like, “we have better technology, more features, cooler style, or superior quality”, indicate a product leader. Answers like, “we listen to our customer needs, offer better service, anticipate customer wants, or deliver tailored solutions”, indicate a customer intimacy leader. What worries me is when I hear random or even conflicting combinations of these answers which would seem to indicate that a company is confused about which value discipline it’s pursuing, and I worry even more when the answer is, “I don't know” because that usually means that the company doesn't really have a strategy at all. Anyway you can use the same question whenever you meet someone from an unfamiliar company whose strategy you want to learn about quickly. For example, it can be a very helpful question to ask when you are interviewing for a job. So, think of this question as another tool to keep handy in your strategy toolkit.

Retrieved from: https://www.youtube.com/watch?v=QPu4v_Ae0Vc

Michael Porter on Competitiviness - Video 4

Transcript

Well competitiveness is a word about which there's quite a bit of confusion. Competitiveness occurs when both, businesses located in a location, a country, a region can meet the test of international competition, but at the same time the living standards of the average citizen can be maintained or increased. Two things have to happen at once, companies have to be able to do well, but workers and citizens employees have to do well, and in order for those two things to happen there's only one way and that's to be productive, you have to create a very productive environment in which workers and companies can produce high-value output.

If we can only do one thing it would be the recommendation on a sustainable budget where we actually get our fiscal house in order in America. This is just a tremendous overhang. In terms of  everybody’s a set of on sailing of uncertainty about the future because it has everything to do with what tax rates are going to be, and how particular programs are going to be cut or not cut. We advocate a simpson-bowles (1:00) type solution. It's going to require new revenue. It doesn't have to require higher rates, but at least it's going to require less deductions and broadening the base of who pays taxes, and it's going to require some meaningful efficiencies in some of our entitlement programs. There's a whole set of other areas I would say the next two or three would be the corporate tax system, the high rate with the high level of deductions which has led to massive complexity, and the US has now managed because Japan finally got around to cutting their corporate tax rate, we now have the dubious distinction of having the highest corporate tax rate in the OECD and we are paying a tremendous penalty and actually even the general public understands the corporate tax problem, so that would be number two and then the third most frequently measured will voted for or mention one when we do surveys and we talk to people is maybe surprisingly, but it’s the skilled immigration. 

Give a green card or staple a green card to every graduate degree in any professional or knowledge field. You have already been trained in the EEUU. You have already been trained in the US university. You have been vetted to get to be here as a student so let’s gives those people a green card. It’s not complicate. It’s not a hard thing to do. These areas we thought were eminently doable there was no basic disagreement about the policy direction among democrats, among republicans. We even went around the congress and the executive branch and as long the door was closed we got democratic folks would say, “oh yeah these make sense”, the republicans say, “oh yeah these things make sense”, the executive branch “oh yeah these make sense”, and yet somehow the complicated dance that we go through in Washington there is some blocker thats is holding back every single one of them.

Retrieved from: https://www.youtube.com/watch?v=Ul_kXIFdwQE

How to develop competitive advantage for your business? - Video 5

Transcript

How to create your competitive advantage? Warren Buffett has been fairly successful in picking winners, and he says, “the key to investing is not assessing how much an industry is going to affect society or how much it will grow, but rather determining the competitive advantage of any given company and above all, the durability of that advantage”. 

The term competitive refers to a unique advantage a company has over companies offering similar goods or services, allow it to generate higher sales volumes, or attract more customers. Jim Collins in his book “From Good to Great” asked these three questions to unravel your competitive advantage.

1. What can your business be the first at?
2. What is that unique thing only your business can offer?
3. What can your business be the best at?

Any one of the above will give you an idea of your competitive advantage once you can identify it, you must be able to communicate it to your employees and your customers. Here are three steps that will help you discover your competitive advantage:

1. Make a brag list. This means you make a list of the big fat claims you make through your marketing messages, advertisements, or sales pitches. Here is where a true in-depth understanding of your business process is important as you compiled a list of all key activities that your business is really good at. Brainstorm as many as possible in a single list down the page. For example, you might make claims like, “we have overnight shipping like Amazon Prime”, “we have highly skilled service staff with a decade of experience behind them”, “we have excellent customer reviews online”, “our pricing is very attractive”. Once you have made this list we move on to the next step. 
2. List those things that your competitors do really well. To differentiate yourself from the competition you must understand the strengths and weaknesses of your competition. Review your competitors and make a list of all the things they do really well. Now, as you build the list you may also notice some commonality and claims that your competition might also do well just as you do. After building the list, cross any activity that you and your competitors do well, this does not mean that you stopped doing them but to get an idea that it can't be your exclusive claims anymore as you cross out, see if there is something left out and the claim can be only yours.
3. Create a fresh list of claims. You might have got something from the second step, if not, make a fresh list of those things only your company can do exceptionally well. You can also interact with your customers and find out why they choose you over you competition. This might lead to big revelations of something you might not have thought before. At the end of this stage, you should only be left with two to three possible competitive advantages and choose the best one from them. You can consider the following reasons to choose your real competitive advantage: Cross out any that can easily be copied by a competitor or new entry to the industry. Cross out any that cannot be marketed or advertised. Cross out any if the advantage could be turned against you by a competitor. 

The activity that you do really well that the competitor is not good at and is valued by your customers becomes your competitive advantage. Once you have selected your competitive advantage, make sure that you quantify them. For example, instead of claiming fastest service say you have one hour response time that is five times faster than your immediate competitor. Instead of saying only customer satisfaction, quantify it with specifications like, “we have 98.8% customer satisfaction rating which is the highest in the industry”. Make sure that your unique claims are backed by a quantifiable data in order to call them your competitive advantage. And remember, your competitive advantage comes from what your people do and not from what they know. Performance and resolve is the key to measure your competitive advantage. Always remember that most advantages can be duplicated within a period of time approximately 70% of all new productos can be duplicated within one year and 60 to 90% of process improvements eventually spread to your competitors. Competitive advantage is a dynamic process that demands constant attention. If you want to make your competitive advantage sustainable, make sure you keep refining them from time to time. If you have any additional suggestion or tools please feel free to share our in comments or write to us. If you enjoyed this video, give it a like and subscribe.

Retrieved from: https://www.youtube.com/watch?v=mvGBYoob1pA

Maintaining The Competitive Advantage - Warren Buffet - Video 6

Transcript

At Berkshire Hathaway we have all kinds of businesses, we own 73 businesses now and then in businesses we are looking for an entity that has durable competitive advantage, somebody that not only is doing well now but will do well 10 or 20 years from now and, in capitalism, when you have a wonderful business it is like having an economic castle and, the nature of capitalism is that people want to come in and take your castles perfectly understandable, I mean if I’m selling television sets or something there is going to be 10 other people who can try sell a better television set. If have restaurant here in Omaha people are gonna try and copy my menu, and get more parking, and take my chef, and so on. So capitalism is all about somebody coming and trying to take the castle. Now, what you need is you need a castle that has some durable competitive advantage. Some castle that has a moat around and that moat that's one of the best moats in many respects is to be a low cost producer, but sometimes the motors just happening more talent, I mean if you are the heavyweight champion in the world and you keep knocking out people you have got competitive advantage as long as you can keep doing it, and it's very profitable if you are the one that happens to be able to do it. If you can turn our great motion pictures I mean you know Steven Spielberg I mean he is a fellow to bet on, and it has enormous economic value. Well, we are looking for that institutionalized. We are not looking for the best brain surgeon in town. We are looking for the Mayo Clinic, so we want an institution that regardless of the person in charge will maintain that competitive advantage over the decades, and we hope we find that in some businesses and then we try to get the best person that we can to run them. Usually it is the person who has been running.

- Are you always right not to make mistakes?

- No, we make mistakes. If we get any funding, we didn’t make mistakes, I mean if I want to play golf and on every one of the 18 holes I hit a hole-in-one I wouldn't be playing golf for a long, I mean it's it, you have to go into the rough occasionally to make the game interesting not too often though.

Money at Work 

What money, this claim checks its a claim check to on the food on the output of others in the future. If I have a pile of dollar bills or if I have a pile of stock certificates or a pile of bonds, those represent claim checks which I or a charity or my descendants or my spouse or whomever can use to exchange for the goods and services produced by others. Somebody else will work for that. I can hire now if wanted to, I could hire thousands of people to sit every day and paint my portrait, you know they would be employed and I could use these claim checks and I could be looked for the perfect portrait of myself. I would never find it because I don't look like Arnold Schwarzenegger but I can keep looking for the guy that would try and make me look that way, and I can keep handing out these claim checks I would command that person services the rest of their life, they wouldn't do anything else for society at all. And you know or I could build myself a wonderful pyramid. I could say you know why should people have to go to Egypt to see one of these things? So I'll spend all of these claim checks I have got and just have all thousands of people will have them in loincloths and you know like the original cast and cecil B DeMille production and they will haul these blocks of granite will build a pyramid, make people forget all about Egypt and that would command the services of other people. So, money will let you, you can exchange these little pieces of paper for other people’s goods and services in the future, and the wisdom with which you do that or your own proclivities you know depends very much on the individual, and some people build pyramids, and I hope other people engage in cancer research.

“Discussing Philanthropy”  

My family and I had everything we could possibly need you know fo the last 50  years, but also 50 years ago that my wife and I decided that beyond taking care of ourselves that there was no reason to set it up. So, then the next 25 generations  of little Buffett kids could keep using these claim checks so they didn't have to do anything to contribute to society and that there were better uses for those claim  checks, and that one way or another the money was going to go back to society, and now you know philanthropy is the logical way to do it, and the question is: who would be best at using those claim checks to benefit 6 billion people around the world? And I have decided that the 5 foundations that I'm allocating the claim checks too will do a first-class job at a time so far, I'm very pleased about it.

“How much debt should a country carry?”

I think generally the keeping debt at a relatively within range of GDP makes sense. I mean I don't think you want debt decline 200% of GDP, I don't think you want to pay off the national debt. I think if the american worker were told by a politician 20 years from now that when he works 40 hours, but an hour and a half of that every week is going simply to service the debts incurred by the previous generation because they over consumed, I think that he would say, “I’m not interested in doing that anymore”. I mean let's take an extreme example. Let's say that back at the time of the revolution, you know we had send somebody over to save King George and he say, “listen, this fight is hardly worth it I mean you are gonna have a lot of people get killed, we are gonna have a lot of people get killed, why don't we just make a deal with you?, we want our independence, we are kind of a pain in the neck anyway, so, why don't we just give you 3% of our output forever and you give us our freedom? Now, King George might like that, and the american colonists might like that I mean 3% of your output, we weren't producing that much anyway. It saves you going to war. Maybe getting shot, killed, and everything else. So, the first generation would say, “it's a fair deal 3% royalties to the english, we get our freedom, nobody gets killed”. The next generation might even be okay with this, my dad told me, “you know I escaped getting killed in the war so I will give 3% of it”. It wouldn't work now if we were giving 3% of the output of the United States to England for freeing us 200 or whatever might have been years ago you know, something would have happened, you know we have fought a war with a mother or we would have repudiated, something would have happened. You know, people just don't at a point they say the hell with it, you know that and countries have repudiated that is in the past. It's much easier just inflate your way out of it. I mean, if I could finance all my own consumption today by handing out something called Wharram bucks or war and I will use, and I had the power to determine the value of those IOUs over time, believe me I would make sure that when I read 10 or 20 years from now that they were worth less, you know per unit than they are today. So, it's any company, any country that piles up external debt will have a great temptation inflation over time and that means that our currency relative to other major currencies as likely to depreciate over time and my bill.

“Wealth Disparities in the U.S” 

Well, there is enormous disparities in terms of how the benefits of the society been distributed and the disparities have gotten wider and our tax system has  favored enormously the rich. I am now treated as sort of an endangered species by the government, they want to make sure nothing bad happens to me. So I get a tax rate of 15% counting payroll taxes virtually on a very large income and the average American is paying a higher tax rate than I am most members of the Forbes 400 are  paying if you count payroll taxes, I think its a bad thing, but I think our tax system has gone very much awry in the last particular the last 10 years I mean that wasn't this way 50 ago. But even though even those on the low end are doing far better than people were you know the ones on the high end we are doing a hundred years ago. I mean, there are many many things that a person earning a normal wage in this country can  do and enjoy that John D Rockefeller couldn't do and couldn't enjoy, so it's a rising tide has lifted the boats, but it's lifted the yachts a lot a lot faster.

Retrieved from: https://www.youtube.com/watch?v=_3Qh9iVlLoE

How to Develop Effective Global Competitive Advantage - Video 7

Transcript

The Global breakfast cereal market is highly competitive around the world. There are two leading companies: kellogg’s and cereal partners, but there are also plenty of the other locally rivals in each country. All of them are competing hard. So, how do you develop a competitive advantage in the various national markets? Let's begin with the three things we know about competitive advantage.

1. It's crucial to strategy.
2. There is no magic formula for developing it. Each company will have its own individual method.
3. It all depends what you mean by effective.

For example, Kellog's effective strategy will be to maintain its leading share of the market while the effective strategy of a smaller national company may just be survival. So, the first lesson in global competitive strategy is define your objectives in the marketplace. 

Although there are two major competitors in the global breakfast cereal market, they are not necessarily equally powerful in every national market. This might simply be because one company launched into a national market before the other and established a strong position in that market. Kelloggs in the UK is a classic example. It launched over 50 years before its rival and has strong and loyal customers as a result.

Nevertheless, competitive advantages can change. For many years Kellogg's was the market leader at least partially because it was first, but cereal partners owned jointly by the Swiss food company Nestle and the American food company General Mills has been working hard in recent years to catch up with Kellogg’s through new product launches acquisitions, low-cost manufacturing, building on its strengths. As a result cereal partners has taken market share from Kellogg's. 

So, this is the second lesson in global competitive strategy, analyze your competitors and plot how you will catch them in the marketplace. Given the strength of the two leading competitors you might think that other companies could not survive globally but you would be wrong. Plenty of other companies exist, why? Because other companies have found market opportunities where they can compete successfully, healthy segments, children’s segments, suppliers of breakfast cereals under the name of  major retailers, and so on. 

So the third lesson in global competitive advantage is experiment to find a defendable market niche, and you can actually take this world market approach further. Not all national markets but breakfast cereals are the same.  Some  markets like the US and the UK are relatively mature with limited growth and many brands. Others markets like china and South Africa are still in the early stages of development. Importantly, competitive advantages are different depending on the degree of market maturity. In slow growing market the competitive advantage of major companies like Kellogg’s are strong and difficult to dislodge. 

In faster growing markets competitive advantages may of fluid companies like Kellogg's and partners can be beatable, how? By new product innovation in flavours packaging, lower manufacturing costs, etc. 

So, the fourth lesson in global competitive advantage is to treat each national market individually where possible and it makes economic sense. They are not all the same. Even in higher technology products like computer tablets and mobile phones. Different countries will present different opportunities because for example the levels of wealth of the population are different and the technology infrastructure also varies. 

Finally, in developing global competitive advantage it is important for each company to identify and focus on it is company’s strengths. The way to compete against Kellogg’s and cereal partners is to understand them, but not to copy them. Imitation is highly unlikely to deliver an advantage. It's more effective to explore questions like: what makes us different?, Why should customers come to us?, Do we have something that sets us apart? 

So, the fifth lesson in global competitive advantage is to identify and build upon your special strengths and you can see more about how to do this in chapter 4 of the Lynx strategic management book plus there is also a separate video that summarizes this on this website.

Retrieved from: https://www.youtube.com/watch?v=mypsmMK3ntU