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Competitive advantage 2
Published on April 27, 2022 5 min
Other Talks in the Series: Key Concepts: Introduction to Strategy
Hello and welcome to this series of introductory talks on business strategy. My name is Robert Grant. I'm a professor of strategic management at Bocconi University in Milan, Italy. I'm also the author of 'Contemporary Strategy Analysis', a leading strategic management textbook used in business programmes throughout the world.
Let us look at this process of strategic innovation. There can be several sources of strategic innovation, this creation of new customer value from novel approaches to competing. A firm can create new markets. MySpace and Facebook created social media. Firms can also create new customer segments within existing markets. Ryanair has created a whole new leisure segment in European aviation. Nintendo, with its Wii and Switch games consoles, has created a new segment of casual gamers. These two areas of creating new markets and creating new segments, is what has been referred to as "Blue Oceans" strategy, creating areas of uncontested market space. Firms can also create new sources of competitive advantage. They can reconfigure their value chains. Zara in fashion clothing, for example, Southwestern in airlines and IKEA in furniture. Firms can also reconceptualise the product. Cirque du Soleil has recreated people's notion of what a circus is. Starbucks has taken a very different approach to supplying coffee. Apple in computers. Its iPad, in effect, is a different way of competing in the mobile computer market. Firms can also create new combinations of performance, for example, combining low prices with quality. Look at Virgin Atlantic and JetBlue in aviation. Look at H&M, Primark, and Boohoo in low-cost fast fashion. Firms can also create new business models. They can access new sources of revenue and profit. Consider Roblox in video games. Roblox now dominates the market in video game entertainment amongst the pre-teen groups of the world.