Creating and Sustaining Competitive Advantage
Course Number 1285
Associate Professor Eric J. Van den Steen
Fall; Q2; 1.5 credits
Exam or paper
This course aims to give students a complete grasp of all aspects of competitive advantage to make them more effective at diagnosing and developing great strategy. The course will examine the role and structure of competitive advantage, how it interacts with and influences competition, the different sources of competitive advantage and their properties, the creation of competitive advantage, and the drivers that determine whether competitive advantage is sustainable or not. In the process, the course will also pay particular attention to the role of organization and leadership in the creation of competitive advantage and how that affects the general manager's role in formulating and executing strategy.
The course will start by exploring the structure of competitive advantage, in particular how a firm's market position, its resources and capabilities, and the nature of competition interact and combine to determine a company's ability to deliver attractive returns over long periods of time. We will address questions such as: How does the effect of competitive advantage depend on the nature of competition? How can an increase in market size sometimes hurt a company's ability to generate attractive returns? When does being a first mover give you a competitive advantage, and when might it be a disadvantage? How sustainable is competitive advantage that is rooted in economies of scale or in the learning curve? How can a company deter imitation?
As the course progresses, attention will gradually shift from the structure of competitive advantage towards the process of creating and sustaining advantage. Here, the course will also consider how effective competitive advantage may depend critically on organization, leadership, and the process of strategy development. We will ask questions such as: When is it advantageous for a company to give up flexibility and commit to a strategy? When and how can a company credibly commit to a competitive position and to a strategy? What limits a manager's degrees of freedom when developing strategy? Should a new leader come up with a new strategy? How to formulate an effective strategy? What is the role of personal convictions versus analysis in developing a strategy? How do all these considerations affect a company's choice of competitive advantage?
The frameworks and concepts of the course are valuable for students who expect to be actively involved in developing, advising on, or assessing a company's strategy, and should be of interest to leaders of both established firms and new ventures.