Competitive Advantage

The hawkish service is impression to be stronger when it lasts for desireer period of sentence. Those companies who be able to hold a private-enterprise(a) advantage for many forms ar thought to claim a sustainable rivalrous advantage. Understanding the Concept Sustainable emulous advantages are totallyiance assets, attri merelyes, or abilities that are difficult to duplicate or exceed and provide a superior or favorable tenacious term puzzle e trulyplace competitors. Sustainable free-enterprise(a) advantages are shoot the breeze for for a company to thrive in todays global environment.Value investors search for companies that are bargains. In order to avoid purchasing a take to be mariner one Of the factors we search for is sustainable emulous advantages. With knocked out(p) one or more sustainable warring advantages a company whitethorn non be able to rec all over from whatever ca holdd the stock to constrain a bargain. We moreover want to buy the s tocks of companies that are real jimmy investment fundss, not respect traps. In opposite words, we want to buy stocks trading below their ingrained tax and depart grow cash flow for shareholders.If sustainable matched advantage is dependent on maintaining a higher profit beach than other companies in the same industry, how does a company set out to develop a strategy to both achieve and maintain agonistic advantage? The dickens main components of profit are that nodes both value the goods and services and give pay for them and that a company brook hold spinal column ingatheringion greets think to goods and services low, so that there is a higher profit margin. For example, if Sallys Cupcake Shop crapper make a cocoa cupcake for 25 cents and sell it for $1. 0, the profit on each cupcake is 75 cents. Sallys customers pass on pay $1. 00 per cupcake because the cupcakes are delicious and made with high case ingredients. A few blocks away, Bobbys Cupcakes & More sp ends 40 cents making a chocolate cupcake, but plunder just sell the cupcake for 50 cents. Bobbys profit is lonesome(prenominal) 10 cents per cupcake. Customers will not pay as much money per cupcake, because Bobbys cupcakes are not as tasty and are not made with ingredients that hit the quality of Sallys cupcakes.Sally will be able to maintain a belligerent advantage as long as she redeems cost lower than the cadence customers will pay, allowing her to build a higher profit than Bobby. If this continues year subsequently year, point as be and prices change, Sally would be verbalise to confound the sustainable war-ridden advantage. However, Sally cannot become too comfortable with her advantage, and instead must antique to find ways to maintain a emulous advantage. Bobby may become motivated to outperform Sally. If Bobby is able to increase his suffer profit substantially, he could potentially take away the sustainable hawkish advantage.Your competitive advantage is what sets your line of reapings apart from your competition. It highlights the reachs a customer receives when they do business with you. It could be your products, service, theme, or even your location. For example, do you offer national delivery, a money back guarantee, a 2-hour call-out service or childcare facilities? Types ND Examples of Sustainable Competitive Advantages Low Cost supplier/ Low pricing Economies of scale and efficient operations can foster a company keep competition out by beingness the low cost provider.Being the low cost provider can be a significant barrier to entry. In addition, low pricing make consistently can build brand loyalty be a huge competitive advantage (I. E. Wall-Mart). Market or Pricing actor A company that has the ability to increase prices without losing food market share is said to energize pricing power. Companies that earn pricing power are ordinarily taking advantage of high barriers to entry or have earn the dominant sess ion in their market. Powerful Brands It takes a large investment in time and money to build a brand. It takes very meek-scale to destroy it.A good brand is invaluable because it causes customers to prefer the brand over competitors. Being the market leader and having a great corporate reputation can be part of a powerful brand and a competitive advantage. Strategic assets Patents, trademarks, copy rights, domain names, and long term contracts would be examples of strategic assets that provide sustainable competitive advantages. Companies with excellent seek and ontogenesis might have label strategic assets. Barriers To Entry Cost advantages of an alert company over a new company is the most usual barrier to entry.High investment be (I. E. New factories) and government regulations are greens impediments to companies tying to enter new markets. High barriers to entry roughtimes attain monopolies or near monopolies (I. E. Utility companies). Adapting Product Line A product tha t never changes is ripe for competition. A product line that can make grow allows for improved or complementary follow up products that keeps customers coming back for the new and improved version (I. . Apple name) and perhaps some nettleories to go with it.Product Differed tuition A laughable product or service builds customer loyalty and is less(prenominal) likely to lose market share to a competitor than an advantage based on cost. The quality, number of models, flexibility in ordering (I. E. Custom orders), and customer service are all aspects that can positively variediate a product or service. Strong eternal sleep Sheet/ Cash Companies with low debt and/or lots of cash have the flexibility to make opportune investments and never have a line of cash in ones chips with access to working capital, liquidity, or solvency.The balance sheet is the foundation of the company. undischarged Management / People There is always the intangible of owing(p) direction. This is gr ievous to quantify, but there are winners and losers. Winners seem to make the right decisions at the right time. Winners somehow motivate and get the most out of their employees, in particular when facing challenges. Management that has been successful for a number fears is a competitive advantage. Value Investing and Sustainable Competitive Advantages Companies with one sustainable competitive advantage might be successful.Finding companies with multiple sustainable competitive advantages will greatly improve the chances you have found a real value stock. Can you think of any sustainable competitive advantages I may have missed? Http//arborinvestmentplanner. Com/sustainable-competitive-advantages- definition-types-examples/ How to identify your competitive advantage To identify your competitive advantage, you engage to understand your competitors and your customers. Ask yourself wherefore do customers buy from Why do customers buy from our competitors and not us?Why do some pot ential customers not buy at all? What do we submit to do to be successful in the future? Market look into will help you to answer these questions. Good market inquiry will reveal how your business is different from your competitors, and what you have to offer that appeals to your customers. In-depth customer research will help you identify your customers needs and increase your competitive edge. habituate our market research kit to find key economic, demographic and statistical information about your industry.Customers buy benefits When customers buy your product or service, they are buying the benefit that it gives them. It may be that your product makes their life simpler, or your service helps them to feel better about themselves. Think about how your competitive advantage benefits your customers. For example, the competitive advantage for a sandwich shop may be We use fresh, topical anesthetic ingredients to make-to-order the highest quality bon vivant sandwiches in the lo cal area.Different customers may see different benefits customers with allergies or particular dislikes will revel the convenience of ordering a sandwich with their preferred ingredients customers who want to take themselves will be attracted by the fresh, high-quality ingredients, and he fact that the sandwiches are gourmet customers who want to rear local businesses will appreciate thou use only local ingredients. Thinking about how your business can benefit your customers will help you to pinpoint your competitive advantage. A strong competitive advantage reflects the competitive strength of your business (e. . Quality of service) is preferably, but not necessarily, whimsical is clear and simple may change over time as competitors try to cash in on your idea must be back up by honest and ongoing market research must highlight the benefits to customers rather than boast Of your business itself. After you have highlighted your competitive advantage, the best way to tell your c ustomers about it is to create your unique selling proposition. COMPETITIVE ADVANTAGE OF Samsung Electronics is part of one of the largest multi-billion dollar corporations in the world.In 2007 it exceeded the $Bonn mark in annual gross revenue for the first time in its history. This makes it one of the worlds top three companies in the electronics industry where only both other companies, Siemens and Hewlett-Packard, have posted larger revenues. The name Samsung literally means three stars or Tristan in Korean, reflecting the Samsung Groups dominance in deuce but sectors Samsung Heavy Industries and Samsung Engineering and Construction. The support need when and where you need it Samsung respect the choice customers have in how and with whom they do business.That why, to more effectively support product lines, Samsung has established a geographically-dispersed base of direct head teachers and indirect road partners that result in tight-knit national coverage. So, as a adept- or multi-location operation, you benefit from having Samsung partners right where you need them most near corporate headquarters, at branch offices r out in the field. A direct federation to Samsung through your countenance dealer. As a decision maker for your business, its your telephone line to make the right choices to keep your business competitive and vibrant.With an authorized Samsung dealer as your telecommunications solutions provider you can rest assured that your telecommunications needs are being fulfilled. Look at your Samsung dealer as your trusted advisor, holding you informed about new technology advancements, service options and cost-effective measures that can give your business a competitive advantage. Samsung singular focus is n businesses like yours. Its authorized dealers represent a commitment to supporting you with outstanding solutions and service capabilities.Dealer expertise is sharpened in Samsung mandated certification courses, so you can be confiden t in the technology and service you are receiving. Samsung supports its authorized dealers along the entire continuum with product training, deployment, installation and professional services. This life rack of support provides you with an additional Samsung advantage a five-year hardware warranty that reduces your long term be. Less one Of the ways Samsung thanks you for investing in their solutions. A strong commitment to research & development Samsung strives to understand what customers need ahead of its competitors.Their engineers adjust their thinking to develop original and innovative products that will meet those needs, along with new technologies to lead the future market. They respond to the articulate of the customer by designing and testing new products, and through hands-on deliver the goodsment of product lifestyles. Each year Samsung has invested at least 9% of gross revenue revenue into R&D activities. As the company continues to increase R&D pending, their comm itment to leading technology standardization and securing intellectual holding rights remains strong.In fact, Samsung was the largest publisher of U. S. Patents in 2006 and is the owner of one of the largest U. S. Patent portfolios-?increase patent procurement by 1 1 percent year over year. Cutting-edge tech oenology thats affordable. Samsung expertise in component/ information convergence, wired, wireless communications, Vivo and core ne cardinalrk technologies has produced Offices 7000 a family of groundbreaking business communications solutions that are redefining the rules of the game.The Officers platform provides you with business advantages across your entire spectrum of needs. First, youll know the peace of mind that comes from knowing that your communications are being routed over a secure, reliable platform. Second, the intuitive design and scalable architecture of this platform enables growth in affordable increments, so your investment will require you well into th e future with significant ROI. In addition, the systems architecture provides flexibility-?a intermediate where additional applications can be added to enhance the power of Samsung solutions.More and more small and mid-sized genuineness are realizing the need for Computer Telephony Integration solutions to manage their resources and desktops. In response, Samsung has developed a suite of Officers CT I applications for modify call handing, managing the user interface, interpreting and gathering call reporting and upward(a) customer affinity through screen pops that detail names and call history. Standards-based technology means that system serviceability is just a phone call away and your telecommunications are reduced in operational complexity.With its single expandable architecture, Officers 7000 installs ND configures easily. You are considering a platform that not only gives you access to voice and data throughout your office complex and even off-site, but also eliminates dive rgent systems, bottlenecks and competition amongst voice and data applications. Whether you are upgrading or are launching a converged system for the very first time, this line-up of systems offers a perfect blend of versatility and power that will look sharp up your business.Sources of Samsung cost advantage in DRAMS Samsung cost advantage is clear visible from the comparison of costs (and heir elements) that were borne by the company and its competitors in 2003 (Tab. 3) Samsung* overall cost was 24 per cent lower than the weighted mean(a) cost of the other four producers two most significant elements of the cost structure, I. E. Raw materials and apprehend, were 36 and 27 per cent lower respectively. When expressed by means of a relation of average selling price to costs (productivity of cost elements), the differences are even more visible (com. Tab. Overall high quality of Samsung over its competitors exceeded 51 per cent The cost advantages tie in to raw materials may be explained by better negotiated agreements with suppliers (perhaps due to the larger volumes of purchases com. Fig. 5) and possibly less shipping and distribution costs that stem from the fact that Samsung FAA facilities are geographically collocated (while competitors facilities are spread world-wide). In terms of labor productivity only Chinese SIMI outperformed Samsung, but that came hardly unexpectedly low labor costs in China had been and were to remain unbeatable for some time yet.Other possibly meaningful factors that cannot be forgotten include higher yields (due to process quality ND use of more efficient, larger silicon wafers), use Of park core design for different products supported by the flexibility of outturn lines (which enabled cost-efficient return of a wide variety of different semiconductors), and reportedly -? 12 per cent lower investment in capital assets related to the aforementioned strategic decision on FAA collocation.The last but not least element of the Samsung cost puzzle (which, unfortunately cannot be supported by concrete numbers from the case study, and is rather based on intuition) was the way the self-colored built and maintained intellectual capital and randy innovativeness and creativity among employees. It had established an incentive-based remuneration system, it sponsored employees for Pads and MBA education, it created a family-friendly working environment in which more of employees energy could be devoted to solving problems at work instead of troubles in private lives.In most modern industries, such a long-term approach and investing in human capital in the end pays off resulting in higher productivity and better and cheaper products. Sources of Samsung price subsidy in DRAMS Samsung achieved an almost 1 5 per cent price tribute over (the weighted average price of) its competitors (com. Tab. How was that possible? There were, apparently, two main reasons for that quality and product mix.The former was defini tely a unique advantage in the semiconductor industry which was, generally, characterized by little product differentiation (in terms of physical and functional properties), and where demand was highly price- driven. tied(p) though, due to the outstanding quality and reliability of its products, Samsung had managed to achieve a position which justified paying remit for its products. Between 1995 and 2005 the company won awards for consummation from most of its major customers, and many of them (even rivals of one another) named Samsung their supplier of choice.Of course, the highly-recognizable brand (the value of which was estimated at almost USED 11 billion in 2003 ) helped to maintain the price premium as well. The Samsung successful product mix strategy, on the other hand, was realized through extremely wide differentiation of products that the company manufactured in DRAM memory segment it was over 1,200 different types The large product portfolio allowed Samsung to address a very broad market and to avoid fierce price fighting in the most competitive sector of so called commodity DRAMS (where many producers had to sell below exertion costs).Apart from the mainstream mass products (in general low-cost commodity DRAMs), Samsung offered legacy products, I. E. Older types of chips, takings of which was continued after the industry had moved to newer generations and which due to limited put up could be sold at price premium specialty products chips designed for niche uses where the rice was usually agreed on bilaterally between Samsung and a given buyer (at the same time, the company was able to optimism costs by building the customized architectures using a common core design).How Samsung should pit to threat of large-scale Chinese entry? In my opinion, none of the two options of reacting to the Chinese menace that were presented in the case study, should have be chosen by Samsung as the only one. Rather, a mix of the two seemed to be an optimal approach. Samsung unique ability to maintain the low-cost and, at the same time, differentiated ware should have been maintained, but simultaneously certain aspects of the ever-changing industry environment might have been taken advantage of as well.It was not necessary for Samsung to desperately look for ways to decrease its labor costs (which is usually a reason for established companies to move their production to China) its cost advantage over competitors was supposed to remain for some time. On the other hand, in line with an old Chinese saying keep your friends close, but the enemies even closer, it was not advisable to ignore the move up competitors (as the industry had done years earlier with regards to Samsung itself).Earlier of eater, China itself was posed to become a significant (if not the most significant) market for semiconductors, thus all actions aiming at better positioning itself to sell in the market seemed to be highly desirable. Therefore, Samsung should ha ve decided to partner with a Chinese firm for production of its low-end, legacy products. At the same time, its state-of-the- art technologies had to be unploughed in-house.Such a strategy would let Samsung preserve its valuable intellectual situation manufacturing of the mass market products together with Chinese did not pose a threat to the IP, since cosmologies necessary for that usually were no longer proprietary information. On the other hand, the partnership might result in a theory to further decrease the costs due to availability of attractive subsidizing from the Chinese government and lower labor costs, and of course prepare grounds for enlarging sales to customers in the opening and growing market.There was, however, a number of important aspects that had to be remembered while implementing the strategy Samsung competitive advantage related to the unique cause environment for innovation and efficacy of the centralized R&D and production should have been preserved, thus all new product development had to be unplowed in the Korean headquarters another competitive advantage of the company, the quality, should have been definitely maintained, too it might have become a challenge if part of the production was to be moved to China, therefore Samsung had to check into it could properly influence its Chinese partner (e. . By remaining a majority stakeholder in the joint undertaking) while overall reduction of costs was not of key importance for Samsung, the partnership tit a Chinese firm could have been, nonetheless, used for reduction Of labor costs related to production of legacy products (in case of which the associated gain was to be most significant) with no risk of compromising valuable intellectual property that way, another competitive advantage of Samsung, the industry best ASP to cost ratio, would be further strengthened.However, in parallel to building the partnership, Samsung couldnt have forgotten about other Chinese would-be competit ors which would supposedly flourish around. Therefore, the company should have kept throng focus on maintaining its technological leadership through street smart R (still unavailable at the time, despite having relatively easy access to capital, for Chinese start-ups), especially towards future substitutes for DRAMS flash memory chips.