Exercises: 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.

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 cell phone brand competing on design and features, and an auto repair shop 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.

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.

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.

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.

An artisanal ice cream parlour opens in a highly touristy coastal town where there are already six ice cream parlours, almost all of them commercial brands. a) Choose a generic competitive strategy for it and justify your choice based on the described market. b) Design two specific decisions within its value chain (procurement, production, sales or service) consistent with the chosen strategy. c) State what could cause this strategy to fail and how you would monitor it.

Two coffee shops coexist on the same street: "Exprés" charges $\$20$ for a coffee, offering self-service and a high bar for standing, while "Origen" charges $\$70$, with trained baristas, single-estate beans and guided tastings. a) Identify the competitive strategy of each coffee shop. b) Analyse what resources and skills each strategy requires (premises, staff, suppliers, brand). c) A third coffee shop wants to set the coffee price at $\$40$ by offering "a bit of everything": assess its risk of being stuck in the middle and what you would recommend.