Achieving competitive advantage through distinctive capabilities 3.1.2
Competitive advantage - An advantage
over the competitors gained by offering consumers greater value, either
by means of lower prices or by providing greater benefits and service
that justifies higher price.
Distinctive Capabilities - Proposed by Professor John Kay in 1993. The capabilities or special quality a business has which is product of the people employed there, which other firms cannot replicate even after they realise what the benefits are that owning the capability confers. For example, Land Rover's distinctive capability is its mastery of how aluminum can be used to build cars that are string but light.
From this, can create a competitive advantage. For Land rover, the benefit has shone through in its Evoque series, which benefits hugely from an aluminum frame. That can feed through to an especially positive consumer image - for technology perhaps, or like Apple, for great design. For example, James Dyson's creation of a unique bag-less vacuum cleaner gave the product a distinct technological capability that allowed the business to gain a 15% market share of the US market in two years and to develop into the market leader by 2015.
Kay suggested that three distinctive capabilities are characteristics of successful firms:
Distinctive Capabilities - Proposed by Professor John Kay in 1993. The capabilities or special quality a business has which is product of the people employed there, which other firms cannot replicate even after they realise what the benefits are that owning the capability confers. For example, Land Rover's distinctive capability is its mastery of how aluminum can be used to build cars that are string but light.
From this, can create a competitive advantage. For Land rover, the benefit has shone through in its Evoque series, which benefits hugely from an aluminum frame. That can feed through to an especially positive consumer image - for technology perhaps, or like Apple, for great design. For example, James Dyson's creation of a unique bag-less vacuum cleaner gave the product a distinct technological capability that allowed the business to gain a 15% market share of the US market in two years and to develop into the market leader by 2015.
Kay suggested that three distinctive capabilities are characteristics of successful firms:
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Innovation
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An obvious source
of advantage for businesses that is able to demonstrate an ability to
innovate (process and product). However, successful innovation quickly
attracts imitation from competitors!
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Architecture
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A system of
relationships within the business, or between the business and its suppliers
and customers, or both. These relationships are typically built on a culture
of open communication, enabling a successful business to be more agile and
flexible.
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Reputation
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A powerful source
of competitive advantage that is built over time. The foundation for
reputation is based on quality and businesses with an established reputation
find it easier to capture new customer relationships. Reputation is easier to
maintain than create – it is hard-earned!
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