As you research General Mills, you may want to compare and contrast that company with the other food service retailers – such as Kraft Foods, Nestle, Tyson Foods, ConAgra, and Kellogg.

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Home>Business & Finance homework help>Management homework help>As you research General Mills, you may want to compare and contrast that company with the other food service retailers – such as Kraft Foods, Nestle, Tyson Foods, ConAgra, and Kellogg.

Strategy for the Internal Environment

Presentation prepared by Dr. Debra Louis Connelley

Touro University International

Click on the speaker icon for sound.

Looking Ahead

  • Competitive advantage: Value creation, low cost, & differentiation
  • The building blocks of competitive advantage
  • Business functions, the value chain and value creation
  • Distinctive competencies, resources, and capabilities
  • The durability of competitive advantage
  • Why do companies fail?
  • Avoiding failure and sustaining competitive advantage

Competitive Advantage: Value Creation, Low Cost & Differentiation

  • Value: Value to the customer – cost

  • A firm can increase value by lowering costs or increasing the value to the customer (design, quality, etc.)

Low cost (Compaq)

Differentiation (Nordstrom’s)

  • The concept of value creation lies at the core of competitive advantage.

  • A company has high profits when it creates more value for its customers.

The Building Blocks of Competitive Advantage

Superior

efficiency

Superior

quality

Superior

innovation

Superior

customer

responsiveness

Competitive Advantage:

  • Low cost
  • Differentiation

Business Functions, the Value Chain, and Value Creation

Research &

development

Production

Marketing

and sales

Service

Outputs

Inputs

Primary Activities

Company infrastructure

Human resources

Materials management

Support

Activities

Distinctive Competencies, Resources, & Capabilities

Resources

Capabilities

Distinctive

Competencies

Superior

  • Efficiency
  • Quality
  • Innovation
  • Customer

responsiveness

Low Cost

Differentiation

Value

Creation

Higher

Profits

The Durability of Competitive Advantage

  • Barriers to Imitation

Imitating resources

Imitating capabilities

  • Capacity of Competitors

  • Industry Dynamism

Why do Companies Fail?

  • Inertia

  • Prior Strategic Commitments

  • The Icarus Paradox

Avoiding Failure and Sustaining Competitive Advantage

  • Focus on the building blocks of competitive advantage
  • Institute continuous improvement and learning
  • Track best industrial practice and use benchmarking
  • Overcome inertia