cost. Indeed it has been pointed out that the two strategies (cost leader-
ship and differentiation) are not mutually exclusive. For instance, total-
quality-management programmes have resulted in superior quality and
cost reductions.
The reality of modern business is that many successful organisations
are ‘stuck-in-the-middle’ within their competitive environments. This is
not to decry the importance of establishing competitive advantage and
consistency of approach. It merely serves to illustrate the competitive nature
of modern business and the importance of uncovering and optimising all
available sources of competitive advantage. It is a question of how best to
add value within the context of the strategic business environment.■ Identifying sources of competitive
advantage
Having an understanding of generic strategy; it is possible to consider
how such general strategy can be translated into specific competitive advan-
tage. A prerequisite to competitive advantage is sustainability. The organ-
isation must be able to sustain its competitive advantage over the long
term. In order to be sustainable the competitive advantage must be:
● Relevant: It must be appropriate to current and future market needs.
Additionally, it must be relevant to the organisation – achievable
within the available resource base.
● Defensible: There must be barriers to replication, otherwise success will
simply be duplicated by competitors. Such barriers tend to be: (i) Asset
based – tangible factors controlled by the organisation such as: location,
plant and machinery, brands and finance. (ii) Skills based – the skills and
resources required to make optimum use of the assets. Examples include:
quality management, brand development, product design and IT skills.
Clearly competitive advantage must be appropriate to the strategic nature
of the industry. An interesting template that evaluates the strategic com-
petitive environment has been developed by the Boston Consultancy
Group (3). This matrix identifies four types of industry (see Figure 8.4).
The industries are classified in terms of: (i) size of competitive advantage
and (ii) number of possible ways to achieve advantage.
● Stalemate industries: Here the potential for competitive advantage is
limited. Advantages are small and only a few approaches exist to achiev-
ing these advantages. Technological advances are commonly adopted
by all industry ‘players’ and we see rapid convergence in product
design/performance. Such industries tend to be mature, highly compet-
itive and often akin to commodity type products where price is the key
buying criteria (e.g. manufacturing desktop computers).
● Volume industries: Here few but high significant advantages exist. These
industries are often capital intensive and are dominated by a few large
players who achieve economies of scale (e.g. volume car manufacture).156 Strategic Marketing: Planning and Control