Competitive Advantage:

Is DQE the base of competitive advantage?

Prof. Spyros Lioukas, Dr Irini Voudouris
Athens University of Economics and Business

Objectives:
Learners will

Understand the meaning of competitive advantage

Understand what are the main types of competitive
advantage
Identify how competitive advantage may be
created
Recognize the basis of sustainable competitive
advantage
Distinguish the new bases of competitive
advantage
Identify how the DQE approach enhances the
creation of sustainable competitive advantage
2

What is Competitive
advantage?
a basis for the firms long term success?
a basis for value creation?

Do we really know where it resides?

Can it be sustainable?
3

What is Competitive
advantage?
When two or more firms compete within
the same market, one firms possesses a
competitive advantage over its rivals when
it earns a persistently higher rate of profit
(or has the potential to earn a persistently
higher rate of profit)
R. M. Grant, 2000

The main types of

Competitive Advantage

Competitive
Competitive
advantage
advantage

uct
d
pro st
r
a
il
co
Sim wer
o
at l

Hig
he
for
rp
un
ric
iqu
e
ep
rod
uc
t

Cost
Costadvantage
advantage

Differentiation
Differentiationadvantage
advantage

Competitive strategies
by Porter
Types of competitive advantage
Low cost
Industry-wide

Market
Niche

Cost leadership

Focus with
low cost

Differentiation

Differentiation

Focus with
differentiation

Competitive strategies
extending Porter
Types of competitive advantage

Low cost
Industry-wide

Cost Leadership

Market

Differentiation
Differentiation

Hybrid Strategy
Niche

Focus with
low cost

Focus with
differentiation

In-between there might be a successful strategy (Value for Money)

Hybrid strategies can be more effective

7

Features of competitive strategies

Cost Leadership
Efficient scale
Standardization
Design for low
production cost
Control of overheads
and R&D
Avoid marginal
customers

Differentiation
Quality
Innovation
Design
Credibility
Brand name
Reputation
Environmental posture
Customer service
Integrated services
8

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
9

May competitive advantage

be sustainable?
Increased competition leads to decrease of
differences in competitive advantage
Standardization/ mass production of unique
features: What can be left for differentiation?
Unique features of differentiation become
prerequisites for survival
Dynamism & complexity of the environment
10

How can competitive

advantage be sustainable?
The firm must seek competitive advantage
in combining resources & capabilities
Develop resources and capabilities, which are
rare, valuable, non-tradable,
Make those resulting competences
sustainable by precluding imitation or
substitution by competitors

The firm must offer competitive products

11

Sustainable competitive advantage

based on capabilities
Innovation
Reputation
Architecture of
relationships

DQE

Strategic
assets

12

Competitive advantage map

Source: Competitiveness: Strategies of the best UK companies, Winning DTI-CBI

Prerequisites
Quality
Low cost

Elements of differentiation
Quality
Low cost

Operational performance

Oper. performance

Delivery time

Delivery time
Creditability

Creditability
Product Service
Design
Marketing
Customer service
Customized product
Reputation
Innovative product

Product Service
Design
Marketing
Customer service
Customized product
Reputation
Innovative product
13

Sustainable competitive advantage

reflected on product
Quality and quality of customer service
Design
Innovative product
Customized product with integrated services
Environmental friendly

14

References
R.M. Grant, Contemporary Strategy Analysis,
Blackwell Publishers, 2000.
M.E. Porter, Competitive Advantage, New York: Free
Press, 1985.
J. Kay, Foundations of Corporate Success, Oxford
University Press, 1995.
G. Johnson, K. Scholes & R. Whittington, Exploring
Corporate Strategy, Prentice Hall, 7th eds, 2005
C. Prahalad & G. Hamel, The core competences of
the corporation, Harvard Business Review, vol. 28,
n.3, may-june, 1990.
15

References
S. Marthur, How firms compete? The Journal of
General Management, vol.14, no 1, autumn 1988.
F. Tilley, P. Hooper & L. Walley, Sustainability and
competitiveness: Are there mutual advantages for
SMEs?, in J. Oswald & F. Tilley, Competitive
Advantage in SMEs: Organising for innovation and
change, Wiley, 2003.
K. Weigelt &C. Camerer, (1988), Reputation and
Corporate Strategy: A review of recent theory and
applications, Strategic Management Journal, 9
16