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? 25