 Thank you, Mike. Hi, everybody. Good evening, good morning, good afternoon, wherever you happen to be. I am Dr. Laura Portales, and I'll be presenting today on Unit 3 of 501 for Sailor Academy. And I'd like to talk a little bit about our unit learning objectives, and I want to also bring that back a little bit to what we've been studying so far in the last couple of units. So in this unit, we're going to talk about the meaning of competitive advantage. We're going to talk about the types of things that can help companies create a competitive advantage. And we're also going to talk a little bit about total quality or TQM management techniques, which is one way to harness that competitive advantage. And we'll also have a mention of some ethical concepts as it relates. So when we think about Unit 1 and Unit 2, we're really throughout the course going through the strategic management process. So if you remember earlier, we looked at internal and external tools that we can use like SWOT analysis and PESTLE analysis to see where our company is at now. We also talked about mission, vision and values and how those are really, really important factors to help drive our strategy. So we've done that external internal analysis. Now we're really looking at, okay, what does our company do that's different and better than any of our competitors? And again, this is going to help us drive our strategy and really narrow down what our goals and objectives should be for ultimately our strategy. So let's talk a little bit then about some definitions here. Oh, wait, no, first, we're going to talk about some of the things that we're going to talk about in this unit. So we're going to learn the definition of opportunity cost, competitive advantage, and generic strategies and also value chains. And all of these ultimately tie to creating that competitive advantage that is extremely important as we begin to develop our strategy. So let's look at some definitions here. We can define competitive advantage is simply just like it sounds as the advantage one company has over another within an industry. So there may be some organizations that have a competitive advantage based on price. So they are able to charge much less for their products, because their value chain and their supply chain, maybe is so large, they're able to sell at a lower price because they're able to buy in bulk and in quantity. Some organizations have a competitive advantage based on their branding, maybe they're a luxury brand that's very sought after and people are willing to pay premium prices for them. So we'll dig a little bit deeper in different types of competitive advantages, but that's sort of our basic working definition that will will ultimately use throughout this unit. Another important thing to keep in mind about competitive advantage is the idea of opportunity cost and opportunity cost essentially means when you make one decision to go in a certain direction. There's something that you're giving up when you make that decision as opposed to another, because of course there are human resources involved and also financial resources that need to be committed. So when we're looking at developing strategy, we're always going to want to look at the opportunity cost. Okay, if we go this direction, we're committing financial and human resources to that direction. It means we can't go this other direction. So it's it's an important consideration when you're looking at spending a lot of money to go in a particular direction. For example, let's suppose your organization decides to introduce their products to Brazil. Well, by going to Brazil, they are making a strategic decision to enter the market in that country, which means they may not have the financial resources to enter, say the French market. So that's really what opportunity cost is about. And if you think about it in terms of a even as a from a personal perspective, by listening to this right now or whenever you listen to it, there's an opportunity cost associated with that. As you're listening to this webinar, you're giving up something else that you could be doing. So opportunity cost is always important, definitely in our personal lives, but definitely for business too. When we're looking at harnessing a competitive advantage, we need to understand what we're giving up in order to make the strategic decision that we're making. The third definition here is a comparative advantage and comparative advantage is tends to be used mostly as an economic term. And it refers to the idea that some organizations or countries may be able to produce something just simply way more efficiently. And that could be a result of the skills that they have. It could be the climate. It could be just the natural resources that they have available to them in the area in which they're manufacturing. So when we when we just to give you a quick example of that, I used to live in Washington State, which is a fairly cold, cold climate. And they did not grow oranges in Washington State because the climate just wasn't right for that. But in the United States and Florida, the climate is perfect for it. And they grow really great oranges. So when we look at comparative advantage, we look at the fact that Florida has a comparative advantage over Washington and many other places for growing oranges. So this is important in terms of competitive advantage for two reasons. The first reason is that oftentimes these terms are confused. But as you can see, they're really, really quite a bit different. And the other thing that's important is understanding what your comparative advantage is, is part of harnessing that competitive advantage, as you begin to think about it. And as you begin to write those objectives and goals for for your ultimate strategy. So I'd like to stop there for just a second. I know that was a lot of information. And see if there are any questions that I can answer for you at this time. Yeah, it sounds great. So if anyone has any questions, I'll put them in the chat and we'll just give you guys a minute or two here to to ask any questions you have and we'll get to those or we'll keep moving. So back in a second. We're back here, we got a we got a question for you here. David asks, Can you please give an example of a competitive advantage? Absolutely. Thanks, David, for that question. So a competitive advantage might be a price competitive advantage. So if an organization is able to sell goods a lot less expensive than their competitors, the price of that good would be an example of a competitive advantage. Another example of competitive advantage might be a organization that has really, really good branding. In terms of everyone knows the brand, they're familiar with the brand. And that means they can then leverage the the brand power that they have in order to sell more products. So those would be two examples. Okay, well, David, let us know in the obviously in the chat, if that was, you know, I answered your question, but that was the only question we have. So I think we can move on. And again, if anyone has any questions, feel free to leave them in the chat. All right, Mike, thank you. So let's talk a little bit about some of the generic strategies that companies use. And these ultimately tie to competitive advantage as well. So companies can have a competitive advantage based on what we call the scope. And the scope essentially is the market size. So how many customers are wanting to buy that particular product or service that you're selling? So when we look at scope, there are some organizations that may have a very, very narrow scope, meaning that they have a very narrow market, there aren't that many people willing to buy the product. But suppose they are really motivated for that particular brand or that particular product. So market size is an important part of determining what our generic strategy is going to be. And the second, the second definition here is a source. And source refers to the idea that what competitive advantage do you actually have is, can you offer your product at the lowest price when compared to your competitors? Or is your product differentiated enough? Excuse me, differentiated enough in order to show the customer value in your product. So based on that, let's take a look at this next slide that is also in in our readings in unit three. And this kind of it simplifies the idea of both scope and source a little bit. So you can see here on the left, that's the scope. And remember, that's the market size. So we can look at a narrow focus or a broad focus. And then when we look at source, which is our source of competitive advantage, we can be low cost, or we can differentiate our product so that customers see a big difference in our product versus others. And that can then give us a competitive advantage. So if we dig a little bit deeper in this, it's when we look at a broad scope and a low cost, we're going to focus on marketing and going to focus our strategy on cost. So for example, some of the things that we may do if we're very focused on cost is try to find suppliers that can provide us with the lowest cost raw materials. We may negotiate contracts with those suppliers to ensure a steady stream of raw materials to produce our product, so that we can continue keeping it at the at the lowest cost. When we look over here on the on the right hand side, and we look at source. So remember, source is our source of competitive advantage. So we there have an overall differentiation strategy versus a focus differentiation. And this is going to depend whether or not we have that broad market or that narrow market. I want you to think for a minute of luxury brand products, I don't want to mention any by name specifically, but think about, you know, that expensive handbag or that really, really expensive car or expensive shoes, where really you're paying for the name brand of that particular product. The this is the type of strategy where the the market is probably fairly narrow. There aren't a lot of people that can afford those luxury products. But the they're able to show that there's such a difference in their product. In terms of the branding, like we talked about a little bit ago, so they're able to sell that product for a much higher price. So in that type of situation, a company that offers luxury luxury products, they don't want to focus on cost, because they know the customers are going to buy the product anyway, because of the branding they have, and the fact that that's a desired product and someone's willing to spend $2,000 for a handbag. So that's when organizations will use this differentiation strategy and show why they are so different. And it creates that desire for that product or that service within the marketplace. So in summary here, this is what I want you to remember about these generic strategies. You can really there are really two main competitive advantages. And of course, there are sub categories to those as well. But it's cost or how you differentiate your product. So if you look at two products that are exactly the same, the branding, the marketing, the desire that we create within our customers is ultimately what offers us that competitive advantage when we're well positioned in the marketplace to have a or offer this product or service that's really, really high value in the customer's mind. So when you look at this, companies are not going to just say, okay, we have a broad market, and we're going to focus on low cost. There's definitely more to it than that. But this model provides us sort of a basis on where do we want to go with this? And then that then helps us narrow down the funnel of possible objectives that we that we want to create based on this generic strategy. And the other thing I want you to remember as we tie all of this together, is that a lot of this data that goes into determining what your generic strategy is was based on the SWOT analysis and the PESTLE analysis you did back in the last unit. So companies do a lot of research and internal investigation to figure out really what their competitive advantage is. And one of the one of the challenges, if you don't do that, and don't have a lot of that background information, is that it's hard to know where you fit within these generic strategies. So that's a lot of the reason why we go through a lot of effort doing that internal and external analysis. So we know exactly where we're at. And it can help target us for for these specific strategies. So um, that's a lot of information I'd like to stop for a second and let's see if there are our questions on that. Yep, that sounds great. As a question, feel free to put it down in the chat and we'll be back in a minute with some answers. And we're back. We have questions down here in the chat from Jeff about if today is the halfway point of the Unispocus study sessions. And I believe that it is we're going through June 13. And I believe that this is the midway point of our study sessions. So anyone who's been here with us this far, we're halfway through. But if that's our only question, I'm just gonna hand it back over and we can keep continuing on with the review. All right, perfect. So now that we've talked about some of those generic strategies, I want us to talk a little bit about the value chain and relate this back to competitive advantage, since that's really the focus of of this unit. So the value chain is ultimately the path in which products and services are created and sold to customers. I do have a graphic on that. But I want to talk a little bit about what this what this really means. In today's world in a global economy, most of our products and services for that matter are, they go through a very, very long path in order to eventually end up in the hands of the customer. And when we look at the value chain, every person that handles that product tends to add value to that product, but it also adds cost as well. So when we look at major retailers that sell at very low cost, their value chain is very, very effective, because they're able to add value at every level in the value chain, but they're able to add that more cheaply than their competitors. So if we think back to, to the generic strategies that we just talked about, this ties into the fact that there's probably a broad, a broad market, and an organization like that is going to focus on cost. So because of that, whenever we focus on cost, we want to make sure that our value chain is as done as cheaply as possible. So we're not having to pay a lot of people throughout the process, making that product then more expensive by the time it gets into the hands of consumers. So let's take a look at this graphic, because I think this is important and explains that concept of value chain pretty well. So the first thing here, this was created by a person named Porter, who also created the generic strategies that we talked about a little bit ago. So when we look at the value chain, let's look at these orange elements on the bottom first, we can look at inbound logistics. So that refers to how we're actually getting our materials to produce a particular product. We can look at how our operations function, and how effective that is, because of course, if our operations are not effective, that that creates more cost on that particular product or service that we're developing. We also want to look at outbound logistics. That means, okay, we've created this product. Now, how do we get it into the hands of the customer? And a lot of times you'll find that a product that you buy in the store may have switched hands four or five times before they actually end up in the hands of the customer. And of course, that adds cost every time. So we want to be effective on our outbound logistics to try to eliminate any unnecessary people in the middle that may be driving up the cost of that product. We also want to look at marketing and sales and the cost associated with with those processes. Finally, we also look at service and you can think about anytime maybe you go on a website and go on and use the chat feature or call into a customer service department, we want to be as effective as possible when we're providing service to our customers. Because of course, if we're not very effective with that aspect, it definitely drives up the cost indirectly at least of the products and services ultimately that we're selling. So you'll find a lot of organizations with the service part of things have implemented artificial intelligence or AI chatbots to help customers get their questions answered. And although that may be an expensive initial investment, companies are finding the AI is really valuable and in the long run, driving down the cost of servicing servicing the customer. So then let's look at these these top activities. So we can call these in the green, we could call these support activities. So these are the things that are not directly related to the manufacturing of a product or service, but they're still still important in the overall functioning of our business. So the first is firm infrastructure. Sorry, I have a little bit of a cop today. So so the first is firm infrastructure and this is the organizational design of the company. It can be the process by which people communicate with within the organization. And some companies are very, very effective at their infrastructure and the organizational chart is developed in a way that it cuts out a lot of wasted time. So when we look at the value chain, from a big picture perspective, we want to make sure that our organization in of itself and structure that we're leveraging is is is effective in order to better serve the customer and produce those products and services. Another support activity is human resource management and human resource management refers to all of the activities that are involved in ultimately keeping your employees happy. So this could be things like the hiring process, the promoting process, how you compensate your people, how you motivate them, the type of training that you offer to them, all of those types of things go into human resource management. And in this this economy, which is mostly a service economy, as of late, that part is very, very important, because you want to make sure your people are happy. If your people are happy, your customers are probably going to be happy too. So that would be an another example of a support activity. A technology also very important technology makes us be able to communicate with our customers, like the social the use of social media, being able to email them back when they have questions, chat bots that we talked about a little bit ago. So technology would be considered a support activity, but still very, very important to the overall operation of our organization. Procurement is also a support activity and procurement refers to the process of actually getting those raw materials available at the right time in the right place that we need them in order to produce a product. So although we're kind of talking about the value chain in terms of our product, I would really like you to think about it. All of these are going to be factors to an extent, even if we're producing a service, like say, an app that does something that people need, you're still going to have all of these elements with service. But when we look at the value chain, oftentimes, it's more focused on product development and getting a product into the hands of the consumer, ultimately. So I want us to look at an example that is that is in our readings. And I know this is going to be maybe a little too small. I don't know, how does that, how does that look, Mike? Is that pretty tiny? I'll see what I can do about maybe making it bigger. But this is a good time to remind people that we will have the slides in the bottom of the, in the description once the unit's review is over. So if you can't see it now, I'll see if I can do something about it. But you keep going. All right. So this, this graphic is also in, in our readings too. And it talks about the, the elements that we just discussed in terms of the value chain and how a donut shop may, may leverage this example of the value chain. So they talk a little bit in this graphic about the operations of the value chain. And specifically operations in this example, they rely on a secret recipe to make, to make their donuts. So that would be an example of operations in the value chain. And then when we look at market, the marketing and sales component, they do, they have a very attention grabbing building, which helps with the marketing and sales of, of the donuts. They talk also about in this graphic about support activities. So again, the support activities are those things that are supplementary to the primary activities that we're actually doing within our business. So this example talks about the firm infrastructure, again, human resource management. And they talk about that in the context of good customer service and training people that work in the donut shop to be friendly and open with customers. And they also talk about a company that uses a conveyor belt to produce the donuts, which would be an element of technology, which, which we discussed a little bit ago. And we also talk about or this graphic also talks about procurement, and the fact that when you're effective at procuring those raw materials that you need to produce donuts in this case, they're able to charge a lower price for those donuts because their procurement processes are very, very effective. They're able to get those raw materials like sugar and flour at the lowest cost possible. So if you can't see this, as Mike said, we will we will be sending these PowerPoints out next Monday and putting them in in the chat. I believe Mike, is that correct? There'll be they'll be in the description along with the, you know, where you could find the playlist of previous courses as well as a link to the course itself down in the description below. So I'd like to take a moment and see if there are any questions on on the value chain specifically or how this ties to competitive advantage. All right, and we'll give everyone just we'll give everyone a minute here to get their questions in if you have any of what we already we already have a question coming in right here that asks is our support activities and primary activities independent in in the value chain? And that's a really good question. I don't think in business anything really operates in a vacuum independently. So while you may have different departments in your organization like human resources and logistics, they do function pretty separately, but they do need to function somewhat in somewhat together in order to make sure that, you know, you have the best people within that department to find the best prices and ensure the processes are smooth. So to answer that question in a shorter way, I think that they're not independent. I think that they really do work need to work independently together to really harness the the most competitive advantage of the organization. Hi, that's great. If anyone has any other questions, feel free to put them down in the chat below. And we will get to them. Of course, if you if you're watching later, feel free to put them in the comments and we'll try and get to them at the start of next week if there's any questions down there in the bottom. Hopefully, the question about the support activities and primary activities was was answered. I'm not seems like it was. You're welcome. Well, you're welcome for I didn't answer the question. But yeah, if there are no other questions, I think this is is this our stopping point for today? Yes, I'd like to go ahead and stop here for unit three. And then next time, I want us to take a really deep dive into comparing competitive advantage and the specific types of competitive advantage, and how you can ultimately tie that to your strategy. So it's a good stopping point, I think a lot to think about so far today. And next time we'll we'll take that deep dive into specific competitive advantages and and how those tie the strategy. All right, well, as always, Laura, thank you for leading us through this. Thank you everyone for joining us. If this is your first one, again, there are links below to our previous videos in the series. And of course, links to the actual course itself down below. If you again, had any questions that hadn't been answered today, feel free to leave them in a comment and we'll be back the same time next Monday to do part two of unit three. So thank you everyone for joining us.