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AGENERALFRAMEWORK THEANALYSISOFCOMPETITIVEPOSITIONISATTHEHEARTOFSTRATEGYWORK TheAnalysis DriversofadvantageWhatdrivescompetitionandcompetitiveadvantage Howwillthisevolve ClientpositionWhatistheclient抯structuralpositionandcapabilities Whereistheclientadvantaged disadvantaged Towhatdegree Howmightthisbeimproved TheResult ClientstrategythatbuildscompetitiveadvantageShapingindustryoutcomesDefiningpositionandcapabilitiesneededforsuccess IDENTIFYINGTHEDRIVERSOFADVANTAGE TheAnalysis DriversofadvantageWhatdrivescompetitionandcompetitiveadvantage Howwillthisevolve ClientpositionWhatistheclient抯structuralpositionandcapabilities Whereistheclientadvantaged disadvantaged Towhatdegree Howmightthisbeimproved ABasicApproach1 Assesscustomervalue2 Identifytheleversofcustomervalue FIRMSGENERATEVALUEFORCUSTOMERSINTWOBASICWAYS EnhancecustomerperformanceFacilitatetheirabilitytocreatevaluewiththeircustomers throughspeed quality features etc EnhancetheirsatisfactionReducecustomercostsDirectly throughlowpricesIndirectly bysavingthecustomerothercosts AssessCustomerValue ASIMPLEEXAMPLE PAPERPRODUCTMANUFACTURERSERVINGTWOSEGMENTS Segments CustomerValueDrivers SomeImportance SwaysPurchasingDecisions ExpectedbyCustomers VitaltoCustomers SmallRegionalPrintersBroadproductrangeManyspecialordersRequiresignificantsalesandtechnicalsupportLargeNationalPrintersNarrowproductrangeLongrunlengthsHighlypricesensitiveRequireinfrequentsalesandtechnicalsupportSensitivetodeliveryperformance Availabilityofproductandtechnicalinformation Competitiveprice FastdeliveryLowoutofstocksQuickaccesstopriceanddeliveryinformation AvailabilityofproductandtechnicalinformationQuickaccesstopriceanddeliveryinformationCompetitivepriceFastdeliveryLowoutofstocks ABILITYTOGENERATECUSTOMERVALUEISROOTEDINAFIRM扴STRUCTURALPOSITIONANDCAPABILITIES IdentifyTheLeversOfValue StructuralPosition Capabilities InputsFactorcostsLocationProductiontechnologyScaleScopeExperienceMarketBrandequityCustomerswitchingcostsGovernmentPatentsSubsidiesFranchiserights ProcessDeliveryNewproductdevelopmentServiceKnowledgeTechnologyManufacturingDatabasesEnablingconditionsManagementofhumanresourcesDecision actionInformationCulture ValueDriverExamples LowOutofStocks CompetitivePrice LEVERSOFCUSTOMERVALUE PAPERPRODUCTMANUFACTUREREXAMPLE IdentifyTheLeversOfValue CapabilitiesLeversProcessbasedKnowledgebasedEnablingStructuralLeversInputsProductiontechnologyMarket Fastreplenishmentcycle suppliercoordinationDemandforecasting capacityplanningClearandcurrentproductbookMarketintelligenceOrder deliveryinformationsystemStockcontrolsystemIntegrationofsalesandserviceSupplierleverageProductioncapacityDistributioncentercapacityReputationforreliability AutomaticpricingupdatesProcessforannualandadhocnegotiationsCompetitorpricingintelligenceCustommodelNegotiationskillswithsuppliersCostcontrolnormsIntegrationofsalesandserviceMilllocationMillscaleRunlengthDistributioncenterscaleCustomerdensityShareposition ASSESSINGCOMPETITIVEPOSITION TheAnalysis DriversofadvantageWhatdrivescompetitionandcompetitiveadvantage Howwillthisevolve ClientpositionWhataretheclient抯structuralpositionandcapabilities Whereistheclientadvantaged disadvantaged Towhatdegree Howmightthisbeimproved ABasicApproach1 Assessrelativestrengthingeneratingcustomervalue2 Evaluatepositiononleversofcustomervalue RELATIVESTRENGTHINGENERATINGCUSTOMERVALUE THEVALUEADVANTAGEMATRIX Lessimportantstrengths Keycurrentbasesofadvantage Lessimportantweaknesses Keysourcesofweakness Significantadvantage Someadvantage Somedisadvantage Significantdisadvantage CompetitiveAdvantage Someimportance Swayspurchasingdecisions Expectedbycustomer Vitaltocustomer CustomerValue AssessRelativeCustomerValue PAPERPRODUCTMANUFACTUREREXAMPLE PORTRAYINGANDQUANTIFYINGRELATIVESTRENGTH GeneralAssessment SpecificQuantification CompetitiveAdvantage Advantaged Disadvantaged High Low ConsumerValue Product technicalinfo Quickprice deliveryinfo Lowoutofstocks Competitiveprice Fastdelivery ValueDriver Metric Client SegmentAverage SegmentLeader WorldClass FastdeliveryQuickprice deliveryinfoCompetitivepriceLowoutofstocksProduct technicalinfo Avg time days ofqueriesanswered 1stcall priceadvantage disadvantage orderlinesoutofstock ofqueriesanswered 555 2 1490 365 2 1465 28501090 19515NA AssessRelativeCustomerValue NationalPrinterSegment Structurallevers Capabilities basedlevers SOURCESOFRELATIVECUSTOMERVALUE POSITIONONTHELEVERSOFVALUE EvaluatePositionOnLevers Evaluatingpositiononleverstellsyouwhytheadvantageordisadvantageexists Advantaged Disadvantaged Competitiveadvantage Competitorsystem Clientsystem Cost unit Size BrandI D Competitor Client Client Competitor x x LEVERSOFCUSTOMERVALUE PAPERPRODUCTMANUFACTUREREXAMPLE EvaluatePositionOnLevers Metric SegmentLeader 101 5 1 0 5Integrated1 5xSome40High Client 142 555221NotintegratedxNo30Medium PercentageoforderlinesoutofstockTimeindaysCapacityshortfallaspercentageofproductionPercentageofordersfornon currentproductsTimeindaysPercenterrorsBuysizeContractlanguageMillionm2perday LowoutofstocksFastreplenishmentcycle suppliercoordinationDemandforecasting capacityplanningClearandcurrentproductbookOrder deliveryinformationsystemStockcontrolsystemIntegrationofsalesandserviceSupplierleverageDistributioncentercapacityReputationforreliability ValuedriverLeversofvalue capabilitiesProcessEnablingconditionsLeversofvalue structuralInputsProductiontechnologyMarket IMPLICATIONS BUILDINGCOMPETITIVEADVANTAGE CustomerValueDriver Speed Price Availability Quality Relativeworthofimprovements LeversofValue CapabilitiesProcessKnowledgeEnablingStru

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