Samuel Curtis Johnson Graduate School of Management, Cornell University

LSM541: Competitive Advantage and Profitability

Competitive Advantage and Profitability

Course Notes

Instructions:

Answer the questions below as a way of reinforcing what you’re learning in the course. You will not be required to submit these notes.

Part One – Five Forces

Perform a structural analysis of your firm, or a firm you know well, using Porter’s Five Forces. To do an analysis of the applicable market, ask questions about the structural features of the market:

Who are the likely entrants in this situation? (Hint: think about questions related to entry that are important to ask when analyzing an industry, besides “Is it possible for another firm to enter?”)
What about internal rivalry?
How do firms compete?
Do they compete on price?
Do they compete on service?
What about buyers?
Do they have power? Are they threatening?
What about suppliers?
Is it easy to change suppliers?
Are the suppliers able to charge amounts that are significantly over their costs?
Are supplier prices dictated by an open market or can this firm bargain directly with them?
Could this firm become its own supplier?
Do substitute products or services exist?
Do consumers shop on price?
How can this firm improve its prospects? Is it possible for this firm to change things to reduce threats?

Part Two – RBV

Perform a structural analysis of your firm or a firm you know well using RBV. To do this, answer the following questions:

What are this firm's resources? What does it do, or what does it have, that other firms do not? (One way to think about this is as "core competency." If you have heard that term before, you can think of core competency as a subset of resources.)
Do you think this firm is successful?
If so, what are the key things that the firm does well? What resources does it possess?
Are this firm's resources rare, scarce, valuable, and hard to imitate?
What makes it difficult for other firms to do what this firm does?
If the firm is not successful, is it possible that its strategies are not designed to align with its resources? What changes to strategy do you recommend?

Part Three – The Value Net

Consider your own firm or one you know well. Think about it in terms of the Value Net. Specifically, answer the following questions:

Does this firm cooperate and compete with other firms in the industry?
If so:
What is the nature of the cooperative effort?
Do you believe cooperation is profitable in this instance?
If not:
Why not?

Provide two examples of ways that this firm is unlike Apple.