Activity: How Good is Your Competitive Advantage?

Executive reading an analytical report

Required Preparation

Before this activity, please complete the following:

  1. Read the assigned reading, “Sustaining Competitive Advantage.”
  2. Complete the corresponding Canvas quiz.
  3. Watch the assigned video:

Sam’s Club Takes On Costco For Market Dominance

Optional Video:

Kirkland Vs. Member’s Mark: Can Sam’s Club Ever Catch Up To Costco?

List of Concepts:

Taste-based loyalty First mover advantage Uninformed consumers Switching costs Network effects Complementors Platform businesses Cross-side network effects Same-side network effects Vertical heterogeneity Horizontal heterogeneity Learning curve Economies of scale Intellectual property rights Market failure

Instructions:

Step 1: Video Immersion and Initial Observation

Step 2: Small Group Discussion: Sharing Initial Insights

  • Share Initial Observations: Within your project group, share your initial observations about Costco and Sam’s Club from the video and connect it to concepts from the reading.
  • Discuss Potential Advantages and Relevant Concepts: Discuss the potential sources of competitive advantage you’ve identified for each company and which of the listed concepts you think are most relevant. Focus on how and why these concepts might apply.
  • Identify Key Areas for Deeper Dive: As a group, identify 2-3 key concepts that seem particularly important for understanding the competitive advantages of both Costco and Sam’s Club to explore further in the class discussion.

Step 3: Class-Wide Discussion: Comparative Analysis and Deeper Dive

  • Facilitated Class Discussion: We will now come together as a whole class for a guided discussion.
  • Group Sharing (Highlights): Each group will briefly share 1-2 key insights or concepts they found particularly interesting or important during their small group discussion.
  • Comparative Analysis - Guided Discussion Prompts: We will use the following prompts to guide our class-wide comparative analysis:
    • Economies of Scale: How do economies of scale play a role for Costco and Sam’s Club? Is it a similar or different advantage for each? How sustainable is it? What are potential countermeasures?
    • Switching Costs: Do switching costs exist for members of these warehouse clubs? If so, how are they created? Are they a strong source of advantage?
    • Network Effects (if applicable): Do network effects play a role in their business models? If so, what type of network effects? How significant are they?
    • Value Proposition & Target Customer: How are their value propositions similar and different? How does this relate to their competitive advantage?
    • Sustainability & Imitation: For the key advantages we’ve identified, how sustainable are they? How easily can they be imitated or counteracted by competitors?
  • Open Discussion & Peer Learning: Engage in open discussion, share your perspectives, build upon each other’s ideas, and challenge assumptions respectfully. Learn from the diverse insights of your classmates.

Step 4: Wrap-Up and Key Takeaways

  • Summarize Key Insights: As a class, we will collectively summarize the main sources of competitive advantage identified for Costco and Sam’s Club, highlighting the concepts from the list that proved most insightful.
  • Reflect on Learning: Briefly reflect on what you learned about competitive advantage, strategic analysis, and the specific strategies of Costco and Sam’s Club through this activity.

Important Reminders for Class Discussion:

  • Focus on Concepts: Keep the discussion grounded in the provided list of strategic concepts.
  • Evidence-Based Reasoning: Support your points with evidence from the video, your knowledge, or logical reasoning.
  • Respectful Engagement: Listen actively to your classmates, share your ideas constructively, and engage respectfully in discussions.
  • Comparative Thinking: Continuously compare and contrast Costco and Sam’s Club throughout the discussion.