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Discuss the concept of competitive advantage and how important it is to a small business

Identify and describe some competitive advantages a small business can build

One dictionary defines "sustainable" as “to keep up or keep going and an action or process."

What value would a ‘sustainable competitive advantage” offer an entrepreneurial business over a competitive business model without sustainability?

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Samantha Balando
Samantha BalandoLv7
28 Sep 2019

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For Southwest to continue to have great success in its competitive advantage, customer satisfaction will continue to be a main priority. The strategy that will assist them in doing this would-be differentiation. Southwest has gained it success on being different from other airlines, by lowering cost, flying to smaller airports that other carriers had no presence in, and it’s no baggage fees. Although Southwest is a leading airline carrier the company is now considering offering more perks to its customers by becoming more innovative with newer planes and offering more inflight services. Michael Levine a professor at NYU, as well as a former executive at Continental and Northwest stated that, “Southwest still has a unique personality, but its flying more and more in formation with the Big three”. (fortune,2015) If they continue to be unique with low cost, but continue to add value and great customer service it will continue to progress as one of the top airline carriers despite its competition.

Debate: Agree or Disagree: Discuss which generic business-level strategy is best suited to keep the company you selected competitive. Offer supporting rationale for your explanation.

Entrepreneurship

1. Discuss what steps Craig took to develop and grow his business. (7 marks)

2. Illustrate the role Craig played in contributing towards the economy (8 marks)

clearrisk | craig rowe

Business is risky, but that is Craig Rowe’s business - risk management to be precise. Craig,

the President of ClearRisk Inc., becomes animated and energized as he explains his line of

work. “Risk,” he says, “is not negative. It is when there is opportunity for a downside or an

upside.” Risk management is about formalizing the decision making process. People are

constantly assessing risks, whether it is instinctively in crossing the street or deliberately in

weighing the pros and cons of buying a car. “Business people,” he says, “engage in the same

process whether in deciding where to build a head office or whether to buy another company.”

the entrepreneur

Craig spent almost 20 years in the insurance industry, where he started right out of high

school. Over the years, he attained various insurance designations and completed many

business courses and ample on-the-job training. Craig is naturally entrepreneurial and also

operated his own consulting company and became involved in several insurance industry

associations. This allowed him to develop a large network of connections.

Craig found himself thinking and talking more and more about risk management. He realized

that if businesses did some basic things to manage risk they would save money. In 2001 he

wrote a book on the topic and later adapted the ideas in to a workshop which he presented

throughout Canada and the United States. Insurance industry professionals and other business

people noticed Craig and saw the logic in his message. Soon he was being invited to speak to

various associations and was asked to assist in writing material on risk management. When

dealing with clients of his consulting business, he noticed the same set of steps and questions

could be applied to different realities in different types of companies. He was sure that there

was something that could be packaged and sold to assist these companies.

He went in search of risk management software. He found some, but none applicable to small

and mid-sized companies and organizations. So he decided to build it. He teamed with David

d’Entremont who had the background provide technical expertise. Together they founded

ClearRisk. They developed a business plan which became their roadmap, even though it was

constantly being adapted to take into account new realities, circumstances and goals. Craig estimates they are on version 30 by now!

Craig decided to leave his job and pursue ClearRisk full-time. It was not an easy decision to

make as Craig had a young family at the time. He had to engage in his own risk management

process and weigh his options. He had almost 20 years of solid insurance industry experience.

He had an extensive network of contacts. He had entrepreneurial experience through his

consulting business. He knew the market. He knew what his customers needed and he knew

that he could develop a product to meet that need. He found a solid business partner to

complement his skills. So the timing was right and after 10 years of thinking, dreaming and

percolating ideas, Craig made the leap in 2006.

Craig says that the biggest challenge facing ClearRisk and any business, whether it is in

starting, sustaining or growing the business, is cash. ClearRisk needed capital to develop its

product. For any business to have credibility with lenders and investors, that initial money has

to come from the business owner. Craig and David secured an operating line of credit from the

bank based on personal guarantees.

Step 2 was to seek more financing to start implementing the business. Craig says that it is

important to look for money before you need it because you are building relationships and

confidence and convincing people that you are creditworthy. A business plan is a necessity but

“everyone invests in people.” This applies to accessing financing from Business Development

Bank of Canada (BDC), Atlantic Canada Opportunities Agency (ACOA), or any government

organization, as well as private lenders and investors. It is necessary to raise private money to

leverage government money.

Another important factor in developing ClearRisk was being accepted by Memorial University’s

Genesis Centre, a facility which provides business and technical support to new and emerging

technology businesses. This added to their credibility and attracted the attention of angel

investors. Angel investors are business people with financial resources available to invest in

new promising businesses.

Technological businesses are expensive to grow and ClearRisk’s growth has been made

possible by private investors and organizations such as Growth Works (a venture capital

company). Ownership of the company is now shared with these investors and ClearRisk is a

corporation with multiple shareholders. One of the tradeoffs in taking money from investors is

that ownership becomes shared. Craig says, “You can have a big piece of something small or

a small piece of something big.” He chose the latter.

Craig’s idea has grown immensely. He keeps the numbers to himself, but says sales have

grown exponentially. His primary market is North America and the ClearRisk software has been

launched in French and Spanish. Customers do not pay an upfront fee; instead, they pay an

annual fee for the software and support. ClearRisk is constantly improving its products. The

team is always enhancing features and improving functionality. Currently, they offer three

programs to consumers: ClearRisk™ Manager, which enables an organization to build and

implement a risk management plan; ClearRisk™ Tracker, which facilitates tracking insurance

claims; and ClearRisk™ Trainer, an online instructional program which increases awareness of

risk and its management. The latter two products are offered in partnership with other

organizations.

ClearRisk’s web-based business is global; however, Craig is cautious about expanding beyond

North America. The insurance industries in the USA and Canada are relatively interconnected

and homogeneous. It would be very difficult to provide support to countries with different

regulations and different languages. ClearRisk offers a web-based software service so they

use web-based marketing, rarely using traditional media. They access all forms of social media

such as Facebook, Twitter, MySpace, and blogs and find the approach cost effective and high

impact. Social media facilitates the use of in-bound marketing.

In addition to web-based marketing, ClearRisk is now getting calls from referrals. Clients are

spreading the word to other businesses seeking a similar product. The demand for ClearRisk’s

product is expanding but Craig resists growing the team too quickly. Craig prefers a small team

and likes the dynamics of small groups. However, more sales people are needed and they will co-op

and computer science students to his company. He likes to hire young people. It is

rewarding to see them take shape and become leaders.

Craig speaks favorably about starting a new business in Newfoundland and Labrador. He

says that the provincial climate is positive. In addition to the practical and financial support

available, the provincial government has done a lot to assist business in recent years, including

reducing taxes and red tape and increasing funding.

When Craig reflects on the path his career has taken, he gives special acknowledgement to

Paul Johnson of Johnson Insurance as a business icon and an inspiration. Mr. Johnson

inherited his father’s small insurance office and built it into an innovative, billion-dollar

Company. Not only was Mr. Johnson a great businessman, he was a community-minded

Philanthropist. This is evident today throughout the capital city in the parks, trail ways, and the

Johnson Geo on Signal Hill. Mr. Johnson has influenced Craig’s professional and

Community life. In addition to Craig’s entrepreneurial success he is firmly rooted in his

Community; he currently serves as Chair of the YM/YWCA.

Craig has advice for young people who dream of starting their own businesses. He says to be

Informed, to go in with open eyes and to seek honest opinions from knowledgeable people. He

advises that an entrepreneur should realize that “the odds are against you, but you need the

tenacity and perseverance to stick with it. It is important to understand your industry, to

understand the need for your product or service and ultimately to understand the risks before

you make the leap.” In business, managing risk is everyone’s business!

1. Discuss what steps Craig took to develop and grow his business.

2. Illustrate the role Craig played in contributing towards the economy

Using Wal-Mart as example, describe where on the best practice frontier Wal-Mart would lie and why.

See example below and write on Wal-Mart

PepsiCo- Diversify

Top of Form

PepsiCo, Inc. is a global food and beverage leader with net revenues of more than $5 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. It engages in the manufacture, marketing, distribution, and sale of beverages, foods, and snacks. It operates through the following segments: Frito-Lay North America; Quaker Foods North America; North America Beverages; Latin America; Europe Sub-Saharan Africa; and Asia, Middle East, and North Africa. The Frito-Lay North America segment markets, distributes, and sells snack foods under the Lay’s, Doritos, Cheetos, Tostitos, Fritos, Ruffles, and Santitas brands.

The best practice frontier represents the efficient use of resources regardless of what a firm’s strategy may be. At PepsiCo, it is integrating sustainability into its business strategy, leaving a positive imprint on society and the environment. PepsiCo calls this Performance with Purpose. It focuses on three pillars of sustainability: Human, Environmental, and Talent. These elements give PepsiCo a competitive advantage. PepsiCo is working to improve the nutritional profile of its products and offer a wider selection of nutritious foods and beverages in response to growing consumer demand. It also works to clearly label what is in its products. It is striving to reduce its impact on the environment by conserving energy and water and reducing packaging volume. It creates a safe, healthy, diverse, and inclusive workplace that reflects the global communities in which the company operates. PepsiCo’s strategy displays Porter’s five forces accounting for a company’s success.

PepsiCo’s water stewardship is amazing. It conserved nearly 16 billion liters of water through the application of water-saving equipment and technologies, creative recycling and re-use, and by deploying a water management system throughout its manufacturing facilities. PepsiCo reduced water and energy related costs by more than $45 million in 2011. PepsiCo is one of the largest agricultural companies and many of its products depend on agricultural raw materials. It globally grows or sources several million tons of fruits and vegetables: 4 million tons of potatoes for its Lays brand; 3 million tons of oranges and other fruits and vegetables for Tropicana, Naked Juice and SoBe brands, and 600,000 tons of oats for Quaker. PepsiCo is working with suppliers — especially farmers — to help them manage and reduce their energy and water use and emissions. As it continues to expand in markets and regions, sustainable agriculture will continue to play an important role in its business model. Hence, PepsiCo’s three pillars of sustainability give it “market power” with respect to customers and suppliers.

In addition, as one of North America’s largest fleet operators, PepsiCo utilizes all-electric and hybrid trucks, and uses alternative fuels to increase efficiency and cut emissions. Overall, PepsiCo’s expertise, size, and engagement with stakeholders around the world position it to make a meaningful difference in some of today’s most pressing issues, creating efficiencies and positive changes in areas where the company works. Moreover, it effectively manages the interrelationship between agriculture, climate change, energy, and water in seeking long-term businesses growth.

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