CREATING SUSTAINABLE

COMPETITIVE ADVANTAGE

Presented by :
ARIEF DARYANTO

Director, Graduate Program of Management and

Business IPB
(MB-IPB)

Current Position :
Director, Graduate Program of Management and Business, Bogor Agricultural University
Senior Lecturer, Department of Economics, Faculty of Economics and Management IPB

Education Background :
Ir. (IPB)
DipAgEc (UNE Australia)
MEc & PhD (UNE Australia)

Research Interest:
Agribusiness Competitiveness Analysis, Industrial Organization, Sustainable Business
Development and Strategic Management.

Organization :
Vice Chairman, Perhimpunan Ekonomi Pertanian (PERHEPI)
Chairman, Asosiasi Program Magister Manajemen Indonesia (APMMI)
General Secretary, Himpunan Alumni IPB (HA-IPB)
Advisory Board & Senior Jugde, Malcolm Baldrige Criteria for Performance Excellence
Supervisory Board, Indonesia Institute for Corporate Directorship (IICD)
Executive Committee, Asian Forum on Business Education

Presentation Outline

Trends and forces of changes in the 21st century

The meaning of world class company
The meaning and types of competitive advantage
How competitive advantage may be created?
The basis of sustainable competitive advantage
How some approaches enhance the creation of sustainable
competitive advantage?

Trends

Forces of Change in Organizations

Resistance to Change
in Organizations

What Is World-class
Company?

World Class Industries

(Lesson Learned From Australia)

Source: the Allen Consulting Group (2006)

World Class Company

World class firms are those that survive and prosper in an

increasingly open global economy.
For some firms, this means competing succesfully with the firms
of other countries in export and domestic markets.
In non-traded sectors, world class firms contribute to the
competiytiveness of other sectors that use their goods and
services.

A Systems Model of Change

5 Dimensions of Corporate Health

Finance
Network
Market
Organization
Operations

5 Dimensions of Corporate Health

World Class vs Conventional

Manufacturing Operation

World Class
Manufacturing Operation

Globally Competitive
Products & Services
World Class
Manufacturing Performance
What makes
The Difference ?

Conventional
Manufacturing Operation

Product &
Performance

Locally Competitive
Products & Services
Average
Manufacturing Performance

13

World Class vs Conventional

Product

Quality
Technology
Consistency
Delivery / Availability

Better
Cheaper
Faster

Performance
Low Cost
Efficient
Reliable
14

Strategies Pursued by World Class Companies

(Lesson Learned From Australia)

WHAT IS COMPETITIVE ADVANTAGE? (1)

a basis for the firms long term success?

a basis for value creation?

Do we really know where it resides?

Can it be sustainable?

WHAT IS COMPETITIVE ADVANTAGE? (2)

When two or more firms compete

within the same market, one firms
possesses a competitive advantage
over its rivals when it earns a
persistently higher rate of profit (or has
the potential to earn a persistently
higher rate of profit)

R. M. Grant, 2000

THE MAIN TYPES OF COMPETITIVE ADVANTAGE

Competitive
Competitive
advantage
advantage

uct
d
ro
p
r
ost
ila
c
m
r
i
S
we
o
l
at

Hig
he
for
rp
un
ric
iqu
e
ep
rod
uc
t

Cost
Costadvantage
advantage

Differentiation
Differentiationadvantage
advantage

COMPETITIVE STRATEGIES
BY PORTER

Types of competitive advantage

Low cost
Industry-wide

Market
Niche

Cost leadership

Focus with
low cost

Differentiation

Differentiation

Focus with
differentiation

COMPETITIVE STRATEGIES
EXTENDING PORTER

Types of competitive advantage

Low cost
Industry-wide
Market

Cost Leadership

Differentiation
Differentiation

Hybrid Strategy
Niche

Focus with
low cost

Focus with
differentiation

In-between there might be a successful strategy (Value

for Money)
Hybrid strategies can be more effective

FEATURES OF COMPETITIVE STRATEGIES

Cost Leadership

Efficient scale
Standardization
Design for low
production cost
Control of overheads
and R&D
Avoid marginal
customers

Differentiation

Quality
Innovation
Design
Credibility
Brand name
Reputation
Environmental
posture
Customer service
Integrated services

SUSTAINABLE COMPETITIVE ADVANTAGE

What

is meant by sustainable
competitive advantage?

Durable
Valuable to the firm

Exploiting weaknesses and neutralizing threats

Unique
Difficult for competitors to imitate
Not easily substitutable

MAY COMPETITIVE ADVANTAGE BE

SUSTAINABLE?

Increased competition leads to decrease of

differences in competitive advantage

Standardization/ mass production of unique

features: What can be left for differentiation?

Unique features of differentiation become

prerequisites for survival

Dynamism & complexity of the environment

HOW CAN COMPETITIVE ADVANTAGE BE

SUSTAINABLE?
The

firm must seek competitive

advantage in combining resources &
capabilities

Develop resources and capabilities, which

are rare, valuable, non-tradable,

Make those resulting competences

sustainable by precluding imitation or
substitution by competitors

The

firm must offer competitive products

SUSTAINABLE COMPETITIVE ADVANTAGE

BASED ON CAPABILITIES

Innovation
Reputation
Architecture of
relationships
Strategic
assets

SCA

COMPETITIVE ADVANTAGE MAP

Prerequisites
Quality

Elements of differentiation
Quality

Low cost

Low cost

Operational performance

Oper. performance

Delivery time

Delivery time
Creditability

Creditability
Product Service
Design

Product Service
Design
Marketing

Marketing
Customer service

Customer service

Customized product

Customized product

Reputation
Innovative product

Reputation
Innovative product

Source: Competitiveness: Strategies of the best UK companies, Winning DTI-CBI

SUSTAINABLE COMPETITIVE ADVANTAGE

REFLECTED ON PRODUCT

Quality and quality of customer service

Design
Innovative product
Customized product with integrated services
Environmental friendly

REFERENCES

R.M. Grant, Contemporary Strategy Analysis,

Blackwell Publishers, 2000.
M.E. Porter, Competitive Advantage, New York:
Free Press, 1985.
J. Kay, Foundations of Corporate Success,
Oxford University Press, 1995.
G. Johnson, K. Scholes & R. Whittington,
Exploring Corporate Strategy, Prentice Hall, 7 th
eds, 2005
C. Prahalad & G. Hamel, The core
competences of the corporation, Harvard
Business Review, vol. 28, n.3, may-june, 1990.

REFERENCES

S. Marthur, How firms compete? The Journal

of General Management, vol.14, no 1, autumn
1988.
F. Tilley, P. Hooper & L. Walley, Sustainability
and competitiveness: Are there mutual
advantages for SMEs?, in J. Oswald & F. Tilley,
Competitive Advantage in SMEs: Organising for
innovation and change, Wiley, 2003.
K. Weigelt &C. Camerer, (1988), Reputation
and Corporate Strategy: A review of recent
theory and applications, Strategic
Management Journal, 9

THANK YOU
adaryant@mb.ipb.ac.id