 As Mike said, well, this is the second part of our review of Unit 1. So I wanted us just to be reminded of the unit learning outcomes that we've been talking about the last time and things that we'll be going through today as well. So we've talked a little bit already about the meaning of competitive advantage and how competitive advantages are created for companies. And some of those factors also that go into creating a competitive advantage. We're also going to talk a little bit today about total quality management and how that can impact competitive advantage in a positive way. And we'll also touch on ethical concepts about objectives and processes as well. But mostly our focus today is going to be continuing on and talking about competitive advantage. What does that mean? And if you think about this from the big picture as we've been going along through the units, really we're looking at the things that a company must do before they really determine their strategy. So we looked at internal factors, external factors. We talked about some tools that needed to be used to do that, such as pastoral analysis and SWOT analysis. So now we're really diving in and talking about some of the specific ways that companies can really use a competitive advantage to help them ultimately build their strategy. And as we continue on through the units, we'll hone in on really determining the specific strategy and then important, how do you go about actually implementing that, which is sometimes the challenge for organizations. So I am going to skip here a bit. And let's go back. In the meantime, definitely, as Mike said, put any questions that you have in the chat. And let's find where we left off. We talked a little bit about the value chain and how that's important to competitive advantage. So I want to start here today and talk a little bit about what is termed Porter's generic strategies. And this can serve as a really good starting point for organizations that really aren't sure what direction to go. But maybe they know what their competitive advantage is. So we address this a little bit in a different context last time. But I do want to talk about it a little bit more now, since this is probably one of the premier theories on strategy that you'll read about as you go through the course. So let's take a look at this. So organizations either determine whether they have a narrow market scope or a broad market scope. So when I say narrow, I mean they have a niche market. There aren't necessarily millions of customers that they're able to serve. And there's nothing wrong with that. That can definitely be a really good strategy, but it would drive if that's the case and it is a narrow market that would make the company come up with different decisions on how they're going to harness their competitive advantage. As opposed to a broad market scope, which is a very large market. It's not a niche market. There are millions and millions of customers that might be interested in buying the product. So that's what we have there on the left hand side. Generally speaking, when we have a narrow market scope, we are going to want to look at using a segmentation strategy, which means that we want to differentiate our product or service from our competitors because we have that narrow market scope. Now, when we go down and we look at the broad market scope, we can when we have all of these customers, we can do one of two things and go one of two directions. We can either differentiate ourselves or we can be the cost leader. So if you think of large discount retailers, for example, they have a broad market scope. Therefore, they use a cost leadership strategy where they say, you know what, our competitive advantage is being the lowest price. Some organizations decide to use a segment or a differentiation strategy because even though their market scope is really large, there may be some sort of uniqueness about their product that makes them really different from competitors. In that case, they would probably want to go with that strategy. So the interesting thing, I think, to note here, and we're going to look at an example in a minute from our readings is that organizations tend to pick just one of these in that that allows them to then focus their resources, human resources, financial resources on the strategy that works fast based on what competency they have and also their market scope. So let's take a look at an example here. So we can see the same kind of chart here and we'll look at a couple of examples. So when we think of a broad target market and low cost, the example that we have here, they would then use a cost leadership strategy. So organizations that are really large, like the one picture here, are they're better able to negotiate with suppliers to really focus on that low cost. So if you look at these types of companies that focused solely on costs, that's ultimately what drives their strategy. How can we get things for the least amount of money so that we can then sell them the least expensively to our customers? If you look at the example on a broad target and uniqueness, this organization differentiates itself by having designer merchandise, high quality products. So they're not competing on cost. That's not the goal of organizations like this. They're ultimately competing on the uniqueness of merchandise that they have, the fact that they have a lot of designers in this example. Now, when we go to the bottom and we look at a narrow market, as we talked about a little bit ago, we can look at a cost leadership focus, which would be similar to the broad target. But the difference here is that they don't have maybe the larger array of products as other organizations do when they have that broad target market. So even though they may be focused on costs, they recognize that their market is a little bit smaller and therefore may focus a little bit their marketing efforts trying to find more maybe unique products as opposed to a mass amount of a lot of different types of products. And then when we look at uniqueness and a narrow target, think of a retailer that maybe is maybe there's only one store in your town or maybe it's the store is, I don't know, 50 miles away. That makes it unique in of itself. And their goal, if they use this strategy, is to have a unique mix of products that are really focused on a specific customer. So rather than trying to serve everybody as you would, if you went with a cost leadership strategy, you know that your market is small. So you're going to focus ultimately on what that specific group of customers want and providing that product or service specifically to meet their needs. So in summary here, when we look at this, when we look at Porter's model, the important thing to remember and to, I guess, understand is you need to know the size of the market in which you're operating in. And you need to know ultimately if your product is unique from your competitors or if you can make it unique based on marketing that you do. Or do you want to focus more on cost? And as you probably have already guessed, a lot of companies, even if they could, they don't want to focus on cost. They really want to focus on the uniqueness of the variety of products and services that they offer. But it's a very important first step when we're determining our strategy because what it ultimately allows us to do is then narrow in on exactly the direction that we want to go. So we've been talking about competitive advantage throughout this unit. And this is ultimately the first step. You may have, you know, customer service as a competitive advantage. You may have innovation in your products, but ultimately it comes down to this. Are you going to focus on the fact that your product is really different or unique or are you going to focus on trying to be the low cost leader within that particular segment? Actually, I think I'd like to stop here for a second because I know that's a lot of information. And let's see if there are any questions out there. If so, go ahead and put them in the comments and we'll give you a minute or so to do that. Excellent. Yep. Just put them right there in the comment section. And if you're joining us later, feel free to put, sorry. Right now, put them in the chat. If you're joining us later, feel free to leave them in a comment and we may we will get to them in a later video. But we will give everyone a minute here to see if they have any questions. Doesn't look like we have any questions right now, but of course, feel free to put them in the chat at any time. And we'll we'll keep this one moving, I guess. Thank you. So I want us next to look at what is called the Delta model. And these are particular strategies that organizations can use besides the Porter's generic strategies that we talked about. And I want you to remember that it's not necessarily one or the other in terms of, oh, we're going to use Porter as our model or we're going to use the Delta model. All of these really work in conjunction to try to give us the big picture of what our strategy should be. So the Delta model looks at three main elements. The first element is called a system lock in and system lock in ultimately refers to creating a product or a service that make it difficult for competitors to enter your market space. So there may be financial barriers, there may be human resource barriers, there may be proprietary information that you have. So the goal here is to be the only game in town, essentially, by making it difficult for your competitors or maybe by nature of the product or service, make it difficult for them to enter the market. One example that comes to mind here is is ride share apps in that there's a big barrier to entry, even though a lot of people could probably build a ride share app and start that business. It takes a lot to go into not just building the app, but finding the drivers and really setting up a system that that works for both drivers and for and for the company. So this is a pretty significant barrier to entry in of itself. Another barrier to entry in that particular market space is the fact that customers are already used to using one or two of the different ride share apps that are available. So because of that, it's hard to get customers to change. So that also in of itself creates a barrier to entry. So if you think about the ride share apps that are available right now, there haven't really been many new ones that have come out over the last couple of years, and that is because part of their competitive advantage is this idea of system lock in and the fact that they're not really able to other companies, it's really difficult to enter into that market space. The other thing that should be noted here is the use of proprietary standards. So if you think about certain computer manufacturers, cell phone manufacturers, oftentimes customers are attracted to that particular product because of the way that it integrates with other brand name products that they have. So this can also create a barrier to entry. If your customers used to using a specific brand of phone, they may not be very willing to switch. And in fact, they may actually continue to buy other products that complement that phone, such as a laptop, for example, because of the proprietary information that is used. So when you think of system lock in, what I'd like you to remember about this is that there's something that makes it hard to enter that market space and this can be either by default. It's just the way that it happens or often more often than not organizations create a system that is so well done and so organized that it's difficult for anyone to be able to enter that market space and compete with them, just like the rideshare apps that that we talked about. So that's the first element of the Delta model. The second element is a total focus on customers. So we could say total customer solutions. And a lot of organizations, as we've moved to more online purchasing, have done a really, really good job with this and that they have a customer experience that is that is fantastic. You know, they have a lot of support. Maybe they have a chat online 24 hours a day that customers can access a lot of YouTube videos of how to use the product. So the idea here is that to create a competitive advantage, you're going to focus 100 percent on the customer, what the customer's experience is when they're engaging with your product or your service and also the types of and the breadth of products and services that we're offering to to that individual customer. This can be a really important direction to go for strategy, depending on the type of organization when everything is completely focused on what the customer wants and providing ultimately that really, really high end support to to the customer. So this can be a really viable competitive advantage for for some organizations. Another advantage could be just simply having the best product. And you'll you remember these terms from a couple of slides ago. The best product may may can mean a lot of different things. It can mean really, really high quality product. It could mean that the product is the lowest price when compared to competitors. Or it could mean that the product is just so different from the competitors. Customers are ultimately attracted to your product as opposed to the competitors. One thing that I want to mention, though, when we talk about having the best product, we're also talking about services, too. So we're putting that in context, a product, but it's the same with with services. But oftentimes, differentiation of a product or service is real or imagined. So really good marketing campaigns can create major differences in the customer's mind about the product. And that's what we call differentiation. So it doesn't actually have to be a real major difference, but it could be through your marketing campaigns. You're creating this perceived difference that is ultimately just as valuable as actually having a product that's really, really different. So hopefully that makes sense, that it doesn't necessarily have to be so entirely different. It's what the customer thinks in their mind, which we normally do through a variety of marketing efforts and campaigns. So let's take a look or let's actually stop there for a second. And I'm wondering if you have any questions about the Delta model. Yeah, feel free to put your questions down in the chat. We'll give everyone just a minute to do that while they catch up. Looks like we don't have any questions in the chat right now. So why don't you just take it back away? And again, if anyone has questions as we're going, put them in the chat and we'll make sure we get to them. As we talked about, we were going to talk a little bit about total quality management. And before we get into this discussion, I'd like to talk a little bit about how this can be a competitive advantage. But actually, first, let's define what total quality management is. So total quality management is the idea that when you prevent defects in creation of a product, it's easier. It's cheaper to do that to prevent those defects than to deal with the defects once they've occurred and the product is in the hands of the customer. So product quality, as you can imagine, is and can be a really, really big competitive advantage. I'm sure that all of us at one point or another have been willing to pay more for a particular product because of the quality of that product. We feel like it's going to last. So that's where total quality management can be a major competitive advantage for some organizations, as long as they take the focus on really managing quality from beginning to end. So when we look at total quality management, just to dig a little bit deeper here, there are four types of costs that organizations face when they're looking at total quality management. So the first and probably the best in the long run is prevention costs. So organizations that are producing a product will try to reduce poor quality from the very beginning, again, before that product gets into the hands of the consumers. So they may try to spend more time innovating a product, making sure that the features of that product, the design of the product is high quality. So while prevention quality costs take a lot of time in the beginning, they can save a lot of time and money ultimately in the long run. Another cost associated with total quality management is appraisal costs. And this is the idea that they may pull some of the products that are being manufactured to inspect them, test them, make sure that they're meeting the quality standards that the company has set. So when we look at internal and external failure costs, these tend to be the most expensive in total quality management because internal failure costs mean that product has already been created, designed, developed, manufactured, and before it goes into the hands of the consumer, they've discovered that there are defects associated with it. So think about when there are software upgrades, for example, for maybe different software that you use either on your phone or your computer. It's a lot less expensive for companies that manufacture that software to determine way ahead of time and the design of that software, what bugs and what issues exist, rather than having to go back and say, oh, no, now we have this product in the hands of consumers and it's not working right. So internal failure costs and external failure costs really the other challenge here is if things don't work right, customers, of course, get upset. So we want to try to avoid that as much as possible by really focusing on some of the earlier costs to total quality management, like the prevention costs that we just talked about. So external failure costs, as you can see here, these are very, very expensive. These are discovered after the product is in the hands of the consumers. So if you think about certain products that maybe were found to be unsafe and then the company had to recall those products and give people their money back, very, very expensive to do that. And also there's the challenge with the customer in that they may be upset. They may not want to buy your brand or your product again. So that's what makes this type of total quality management costs so expensive is not only are you recalling products, for example, but you've potentially lost customers as a result. So when we look at total quality management as a potential competitive advantage, really we want to focus on the prevention quality costs. So we want to make sure that we have good design from the very beginning. We want to make sure that we're really being aware of the products that are being manufactured and ensuring that they're meeting the quality expectations of our customer before they ever get into the hands of the customer. So kind of along those same lines, I want us to talk a little bit about total quality management elements. So we've been talking about it from the perspective of a product or a service and really the research and development and the design of that product and the manufacturing. But there are other things that are really, really important when we look at companies that do total quality management. Well, the first is ultimately that focus on the customer and really wanting to have the best product or service in the hands of the customer and doing that at all costs. So really, again, looking at product design, looking at our suppliers, how we get the products into the hands of the consumer. Everything related to the customer, including customer service, as we talked about a little while ago, really, really important element of total quality management. Another important element is the idea of continuous improvement. And just like the term sounds, we never want to be satisfied with where we're at right now with our whether it be our manufacturing processes or product development, research and development, we always want to try to be doing better. This is often ingrained in a company culture, which is often done by leadership of the organization. But it's the idea that we always want to be doing better and that we always want to be improving not just our product or service, but our workflows, our processes to make it better and more efficient, which then ultimately makes that product or service less expensive to to the customers. The third really important element is involvement of the employees. When you look at implementing total quality management in your organization, that can't be some decision that's made by, you know, the CEO and a few select managers, it really has to have buy in from all employees where everyone is engaged with this focus on doing what's best for the customer continually improving processes and workflows. So that involvement doesn't just mean that the CEO and some managers are sitting in a meeting and making decisions on quality. That really needs to come both from that, that part of the organization, but also from the employees. If you think about a manufacturing facility, for example, that's manufacturing products, the employees that are actually manufacturing them, see a lot more than the CEO does in terms of the physical product day to day or the physical service that's being provided day to day. So that's where employee involvement is really important, because they're the ones that know what maybe what issues are happening. So it really needs to be to have total quality management in an organization and harness that as a competitive advantage. We want to make sure that people are involved to all levels of the organization, ultimately to ensure that we are really producing the best quality product and service and meeting the needs of our customers. So a few other elements to total quality management. The first is the idea of having quality tools, which goes a little bit with a product design as well. So quality tools in that, you know, you're providing your employees with with with things that work, that enable them to do their do the best job that they can do. In terms of product design that goes back a little bit to what we were talking about in that, when we don't want to just produce a product and then start mass producing it and realize later that there was a design flaw in that particular product. So we definitely want to make sure that from the very beginning, we're designing quality and quality products that work like they're supposed to that are safe for our customers. And that then meets total quality management standards. And then another important aspect is the idea of process management. And I use the term a little bit ago workflow. So it is a little bit with with workflow. What is the best way? What is the the most cost effective way to get product from A to B, or to get the product within this warehouse from that space to that space. So when we look at total quality management practices, we always want to be looking at how can we do things better? What how can we save time in this process that we're utilizing? And this is oftentimes the hardest part for organizations is to really be able to take a step back and look at the the internal processes that they're using and ensuring that they're effective and making changes where needed. When you see that you can have a time savings or some kind of benefit, ultimately by changing the processes. So the the final thing that I want to talk about actually in this unit and about total quality management and competitive advantage is when you look at companies that implement these techniques for total quality management, they're able to harness a competitive advantage, because our product is genuine, usually higher quality. But also when they're able to effectively manage their processes, they're sometimes able to sell even at a lower cost, because they're really analyzing their processes, their design, and therefore they can sell the product at a lower cost. So ideally, when implementing total quality management, you could benefit competitive advantage in both of those ways, by having a higher quality product that your customers are willing to maybe to pay more for, but also products that you know, all of your processes are well done, they're well organized, and you can save time and money by doing that, and maybe even enhance your profit margin or be able to sell the product for for more because of the quality. So this this closes, I do want to see if there are questions, but this closes unit three, which was all about competitive advantage. And when we start talking about unit four, as I mentioned at the beginning of this session, we're going to dig in and start talking about specific strategies and considerations around the strategies that you develop in order to in order to make your strategy successful. Are there any questions? Um, yeah, let's give everyone a chance to put any questions you have there in in the chat. And of course, our minor one, as you just did, that will be here again, same time next week, started on unit four. Again, if you haven't started the course, there's a link down in the description, as well as a link to all the archives of these old videos that we've done before. I'm not currently seeing any questions. So I'll just go a little bit longer just, you know, in case people have anything, but yes, you know, if you're coming to us late, again, you can leave a comment in the in the in the in the archive of the video, we'll see it and we'll we'll try and get to it in a later video. But yeah, I'm not seeing any questions. So I think we can probably wrap this up. Again, thank you. Thank you, Laura for taking us through all of this. It's been great. Thank you everyone for joining us. And we will we will see everyone at the same time next week.