Counter Positioning
When a new company adopts a superior business model which the incumbent can't (or won't) copy.
Example
Netflix vs Blockbuster
Tesla vs GM
The new model could enable lower costs, recurring revenue, or better margins.
Why can't the incumbents copy the better model?
It would destroy an existing business
Internal cultural/contract issues (especially with unions)
Management incentivizes
Business model innovation can be just as disruptive as technological innovation.
Cornered Resource
The ability to charge higher prices, or have lower internal costs, or create a product that competitors can't because you can access something they can't.
Examples:
Physical location (Dump, Mine, Waterway)
Government license
Patents
Talent
Employing the best AI engineers in the world is a cornered resource right now
Network Economies
The value of a product increases as the number of people using it increases.
AI data training
Dating app
Marketplace
Social network
Market leaders can dominate their industry because their advantage grows exponentially.
Scale Economies
Cost per unit decrease as volume increases.
The biggest players can charge prices that competitors can't match.
Fulfilment centres (Amazon)
Purchasing leverage (Costco)
Distribution density (UPS)
Switching Costs
The customer loses time, skills, relationships, or money to switch to a competitor.
This allows incumbent to charge higher prices without losing customers to competitor.
When did you last switch banks?
When did you last switch operating systems?
Switching costs in action.
Competitors must incur huge costs to get customers to switch (why credit cards offer huge sign up bonuses).
Branding
When a product/service name is perceived to haver higher perceived or reduce uncertainty that causes customers to buy it over competitors.
Building a brand can take decades, but it can be a powerful advantage when done correctly.
Process Power
Improved product attributes and/or lower costs due to superior process.
It can take decades to perfect production & distribution (especially if vertically integrated), but the "know how" can be a durable competitive advantage
Note:
A company can make use of multiple powers in their history.
Netflix started with Counter Positioning, then it developed Scale Economies, now it largely relies on Brand
Apple, Tesla, Microsoft, and Google have numerous powers working in their favor simultaneously
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