Domino's Pizza

1
The resources and capabilities that have been
determined to be a source of competitive
advantage for a firm over its rivals.
Core Competency
An integrated and coordinated set of actions
taken to exploit core competencies and gain a
competitive advantage.
Strategy
Actions taken to provide value to customers and
gain a competitive advantage by exploiting core
competencies in specific, individual product
markets.
Business Level Strategy
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Generic Business Level Strategies
Source of Competitive Advantage
Cost
Uniqueness
Cost Leadership
Differen- tiation
Broad Target Market
Breadth of Competitive Scope
Focused Differen- tiation
Focused Low Cost
Narrow Target Market
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Cost Leadership Business Level Strategy
Requirements
Relatively standardized products
Constant effort to reduce costs through
Features acceptable to many customers
Lowest competitive price
Building efficient scale facilities

Monitoring costs of activities provided by
outsiders
Tight control of production costs and overhead


Minimizing costs of sales, RD and service


Simplification of processes
State of the Art manufacturing facilities

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Value Creating Activities common to a Cost
Leadership Business Level Strategy
Support Activities
Primary Activities
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How to obtain a Cost Advantage
1
Determine and Control Cost Drivers
2
Alter production process
New raw material
Change in automation
Forward integration
New distribution channel
Backward integration
New advertising media
Change location relative to suppliers or buyers
Direct sales in place of indirect sales
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Example of Reconfiguring the Value Chain
Ship on the Hoof to Rail Center (Chicago)
Slaughter into sides of beef
Old Way
Ranch Cattle
Boxed Cuts at Markets
Iowa Beef Packers
Locate large automated plants near ranches
Ship cuts already Boxed to Markets
New Way
New Way
Process into Boxed Cuts at plants
Save on shipping and cattle weight loss
Utilize cheaper non-union rural labor
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Effective Cost Leaders can remain profitable even
when the Five Forces appear unattractive
Threat of New Entrants
Competitors avoid price wars with Cost Leaders,
which creates higher profits for entire industry
Rivalry Among Competing Firms in Industry
Bargaining Power of Suppliers
Bargaining Power of Buyers
Can mitigate Buyer Power by
Driving prices far below competitors which may
cause exit and shift power back to firm
Threat of Substitute Products
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Differentiation Business Level Strategy
Requirements
Value provided by unique features and value
characteristics
Constant effort to differ-entiate products
through
Developing new systems and processes

Command premium price
High customer service

Shaping perceptions through advertising
Superior quality

Quality focus
Prestige or exclusivity
Capability in RD

Maximize Human Resource contributions through low
turnover and high motivation

Rapid innovation
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Value Creating Activities common to a
Differentiation Business Level Strategy
Support Activities
MARGIN
MARGIN
Primary Activities
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Create Value with Differentiation by
1
Lowering Buyers Costs
Raising Buyers Performance
2
3
Sustainability is created through
Creating barriers by perceptions of uniqueness
Creating switching costs through differentiation
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Effective Differentiators can remain profitable
even when the Five Forces appear unattractive
Threat of New Entrants
Brand loyalty overcomes much price competition
Rivalry Among Competing Firms in Industry
Bargaining Power of Suppliers
Bargaining Power of Buyers
Can mitigate Buyer Power because well
differentiated products reduce customer
sensitivity to price increases
Threat of Substitute Products
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Focused Business Level Strategies
Focused Business Level Strategies involve the
same basic approach as Broad Market Strategies
However.....
Opportunities may exist because
Large firms may overlook small niches

Firm may lack resources to compete industrywide


May be able to serve a narrow market segment more
effectively than industrywide competitors
Focus can allow you to direct resources to
certain value chain activities to build
competitive advantage

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Generic Business Level Strategies
Source of Competitive Advantage
Cost
Uniqueness
Cost Leadership
Differen- tiation
Broad Target Market
Integrated Low Cost/ Differentiation
Breadth of Competitive Scope
Focused Differen- tiation
Focused Low Cost
Narrow Target Market
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Integrated Low Cost/Differentiation Strategy
Firms using an Integrated Strategy may
Adapt more quickly
Learn new skills and technologies
May utilize Flexible Manufacturing Systems to
create differentiated products at low costs
Leverage core competencies through Information
Networks across multiple business units
May utilize Total Quality Management (TQM) to
create high quality differentiated products which
simultaneously driving down costs
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Integrated Low Cost/Differentiation Strategy
Southwest Airlines
Differentiation
Low Cost
Use a single aircraft model (Boeing 737)
Focus on customer satisfaction
Use secondary airports
High level of employee dedication
Fly short routes
No meals
New flight services for business
travelers (Phones and faxes)
15 minute turnaround time
No reserved seats
No travel agent reservations