Competitive strategies

Explain what a competitive advantage is and what two conditions it must meet to truly be one: that the customer values it and that it is difficult to imitate. Give an example of an advantage that meets both conditions and another of a supposed advantage that disappears quickly because competitors copy it.

A neighbourhood restaurant survives twenty years while much larger chains close down. Its owner says: "My advantage is that I know my customers and they know me." a) Discuss whether that advantage meets the requirements of a lasting competitive advantage: that the customer values it, that it is uncommon and that it is difficult to imitate. b) Explain the difference between having valuable resources (the premises, the kitchen) and having valuable capabilities (the relationship with the clientele, the know-how). c) Analyse whether that advantage would survive franchising the restaurant and what would happen to it as it grew.

Identify the generic competitive strategy of each business (cost leadership, differentiation, or focus) and justify your choice: an airline selling the cheapest tickets on the market, a premium mobile phone brand competing on design and features, and a workshop that only repairs classic cars over 30 years old.

The figure organizes Porter's generic strategies according to the source of advantage (cost or differentiation) and the competitive scope (broad market or a segment). Identify the strategy in the box marked with "?", explain it, and provide an example of a company that follows it.

Explain what cost leadership is and name three levers that make it possible (economies of scale, learning and accumulated experience, making full use of production capacity). Illustrate each lever with an example applied to a parcel delivery company.

A hypermarket on the outskirts and a local supermarket sell very similar products. a) Explain which of the two can pursue cost leadership and why (high-volume purchasing, logistics, own brands). b) Reason what strategy is left for the local supermarket to survive (focus: proximity, opening hours, fresh produce, personal service) and why competing on price would be suicidal for it.

Two crisp manufacturers sell the same packet at $1\ \text{€}$: the leader produces 1 000 000 packets a month with a unit cost of $0,50\ \text{€}$ and the small one, 50 000 packets with a unit cost of $0,90\ \text{€}$. a) Calculate the margin per packet and the total monthly margin of each. b) Explain with the result why cost leadership is such a tough barrier for small rivals. c) State what strategy you would recommend to the small one instead of fighting on price.

Explain what differentiation is and why it allows charging higher prices than the competition. Then classify these differentiations according to whether they are based on the product, the service, the brand or the design: a burger restaurant with certified organic ingredients, a workshop that collects the car from the customer's home, a trainer brand that sponsors famous athletes and a lamp recognisable at first sight.

An artisan gin brand triumphs with an original bottle and botanicals; the following year, three big brands launch almost identical products with much more advertising. a) Explain why an imitable differentiation stops being a competitive advantage. b) Propose two ways to make the differentiation harder to copy (recipe and know-how, brand and customer community, industrial property registrations, exclusive agreements with suppliers). c) Reason whether it pays off for the artisan to lower the price to defend himself.

Explain what the focus or segmentation strategy is and how it differs from competing in the whole market. Then identify the segment or niche each business focuses on: a bookshop specialised in comics, a travel agency that only works with businesses and a gluten-free patisserie.

Explain in your own words what happens to a business that gets "stuck in the middle": it is neither the cheapest nor does it offer anything different. Give the example of a restaurant that falls into that mistake and explain why it is so hard for it to get out once it is stuck there.

A clothing chain sells garments that are neither particularly cheap nor particularly original, and its shops are half empty. a) Explain what it means to be "stuck in the middle" between generic strategies and why it is a weak position. b) Propose two coherent ways out for that chain, one through costs and another through differentiation, with specific decisions for each.

Explain what a company's value chain is and what analysing it is for. Then classify these activities of a yoghurt factory into primary (creating and selling the product) or support (sustaining the former): receiving the milk, packaging the yoghurt, the accounting, the delivery to supermarkets and the training of the operators.

The value chain divides a business into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, after-sales service) and support activities (firm infrastructure, human resource management, technological development and procurement). a) Classify these activities for a home delivery pizzeria: buying ingredients, kneading and baking, maintaining the ordering app, delivering pizzas, handling complaints, and hiring staff. b) If the pizzeria's competitive advantage is always delivering within 20 minutes, state which activities generate this advantage and how it is supported by the others.

A low-cost airline uses a single aircraft model, flies to cheaper secondary airports, sells tickets online only, and charges extra for luggage and food. a) Match each of these decisions with activities in its value chain and explain how they enable cost leadership. b) Analyse two risks of this strategy (price war, imitation, rising fuel prices, secondary airports becoming more expensive). c) Explain why another airline can make money on the same routes using the opposite strategy.