Creating Profit Through Alliances - business models for collaboration E-book | Page 27
Is it a valuable strength? The ability to build
perfect carriages became worthless once
automobiles captured the market.
Can the strength be utilised within your
business context? Knowledge of microbiology
may be valuable, rare and hard to imitate, but
quite useless within a simple production firm.
Is the strength rare? Is it something only your
company is capable of, or is it a basic
prerequisite for market operation?
Is the strength inimitable? Distribution through
the Internet is not a particular feat any more,
now that everyone can open an online shop
within a day.
Knowledge of
automotive technology
Familiar brand name
Customers can track
courier on the Internet
Prestigious customers
Patented packaging
technology
Inimitable
Rare
Organisable
Valuable
Depending on how you score on this list, you may be
in a situation of competitive parity (equivalence), or
of having a temporary competitive advantage, or of
having a durable competitive advantage. Figure 13
offers an illustration.
Competitive parity
Temporary competitive
advantage
Temporary competitive
advantage
Competitive parity
the customers but only against high costs, and
someone else can do so more efficiently, then it
makes sense to seek a partner. This is illustrated by
the value-engineering model12 (Figure 14).
Components of your product or service with a
low customer value and low costs (for instance
the transport packaging) can best be purchased.
Components with a high customer value but
relatively low costs for you should certainly be
developed and supplied by your own company.
For example, right now it would not make sense
for Apple to have the user interface of their
iPods and iPhones developed by a third party.
Components with a low customer value and
high costs for you had better be left out of your
product or service. As an example: a ten-year
warranty on a watch which most customers will
tire of in five years and replace with a new one.
For components with a high customer value and
high costs for you, it is worthwhile looking at a
partner: this party may have a better
understanding of the customer's need, or be
able to produce or distribute the component
more cheaply, and can thus deliver more valuefor-money.
Value for
the customer
high
Use as
selling point
Outsource
Partnership
Durable competitive
advantage
Figure 13. Resource based view assessment
It is important for companies to focus on the areas in
which they truly deliver value-for-money. If you can
convert competences into value for the customer, and
you can do so at relatively low costs, then you're
better off keeping these competences under your
own roof. But if the competences deliver value for
low
Procure
Remove
low
high
Costs
Figure 14. What activities to perform in-house and which to have
another party perform?
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