S TA R T- U P A N D T H E N E E D F O R

C O M P ET I T I V E A D VA N TAG E
CHAPTER 2
 AFTER STUDYING THIS CHAPTER,
YOU SHOULD BE ABLE TO:
• Distinguish among the different types o and sources of start-up ideas.
• Internal and external analysis to identify and assess new business ideas, factors
that contribute to competitive advantage
• Strategy options of building and sustaining competitive advantage
• Market segmentation and its related strategies
• Concept of niche marketing and its importance to small business
THE START-UP:
CREATING A NEW BUSINESS
• Starting from “scratch” WHY?
– based on a recently invented or developed product/service
– take advantage of an ideal location, equipment, product/service, employees, suppliers, and bankers
– avoid undesirable precedents, policies, procedures, and
– legal commitments of existing firms
– Recognize high potential opportunities

https://www.hillstreetbeverages.com/
https://www.opstart.ca/promising-business-opportunities-canada/
FINDING START-UP IDEAS
CONT…
• New market ideas: Centered around providing customers with an existing
product or service not available in the market. ( UPPERCASE publishes)
• New technology ideas: centered with providing customers with a new
products or services. ( Skyline Studio)
• New benefit ideas: Provide customers with an improved product.(dendy &
co, https://thehealthybutcher.com/blog/store-locations/)
SOURCES OF
START-UP
IDEAS
 USING INTERNAL AND EXTERNAL
ANALYSIS TO IDENTIFY AND ASSESS
NEW BUSINESS IDEAS
 CONT..
• Industry environment
INSIDE-OUT
ANALYSIS
• Organizational resources:
INSIDE-OUT
ANALYSIS
• Tangible and Intangible
resources:
• https://www.slideshare.net/Keyesscientist/tim-hortons-strategy-and-core-
competencies
CORE
COMPETENCIES

• Capabilities that provide a

firm with a competitive edge
and reflect its personality
• A benefit that exits when a
firms has product or service
that it seen by its target
market as better than those
of competetiors
COMPETITIVE
ADVANTAGE
FACTORS
• McDonald's is an industry
leader in the fast food
industry. Its key competitive
advantages have included
nutrition, convenience,
affordability, innovation, quality,
hygiene, and value added
services. The success of the
organization has been its
ability to leverage its key
strengths so that it can
overcome weaknesses.
INTEGRATING
INTERNAL AND
EXTERNAL ANALYSIS
SELECTING STRATEGIES
TO GAIN COMPETITIVE
ADVANTAGE

• Cost based: Lower prices

and still make profits
• Differentiation based:
Unique attributes that are
valued by consumers(https://tec-
canada.com/insights/6-companies-that-cleverly-
use-differentiation-strategies-gain-competitive-
advantage/)
SUSTAINABLE
COMPETITIVE ADVANTAGE

• An established value – created

industry position that is likely to
endure over time.
• Ian MacMillan describes the
competitive advantage life cycle
MARKET SEGMENTATION
AND ITS VARIABLES

• Division of a market into several

smaller groups wit h similar needs or
buying behavior.
THE MULTI
SEGMENTATION
STRATEGY
• A strategy that recognizes
different preference of
individual market segment
land develop a unique
marketing mix for each
 NICHE
RESTRICTING FOCUS TO LIMITING SALES TO A
A SINGLE MARKET SINGLE GEOGRAPHICAL
SEGMENT REGION

MARKETING
STRATEGIES

EMPHASIZING A SINGLE CONCENTRATING ON

PRODUCT OR SERVICE THE SUPERIORITY OF THE
PRODUCT
Focus strategy is imitated

Target segment becomes structurally

unattractive because of erosion of the structure
or because demand simply disappears NICHE
MARKETING
Target segment’s differences from other
segments narrow EROSION

New firms subsegment the industry