Week 2 Instructor Guide: Competitive Advantage

In-class reference for Session 1 (Tue) + Session 2 (Thu)

---

Session 1: Strategy Frameworks + Zara Case

Time: 75 min | Date: Tue, Jan 27, 2:00 PM

Opening (5 min)

• Collect handwritten notes at door (3 points participation)
• Return notes after collection so students can use them
• Preview: "Today = frameworks. Thursday = debate."

---

Porter's Five Forces (20 min)

Framework for analyzing industry attractiveness — not firm strength.

Force	Question	High = Bad for Profits
Threat of New Entrants	How easy to enter?	Low barriers → more competition
Supplier Power	Can suppliers dictate terms?	Few suppliers → leverage
Buyer Power	Can customers dictate terms?	Concentrated buyers → price pressure
Threat of Substitutes	Alternative products?	Many substitutes → price ceiling
Rivalry	How intense is competition?	Many similar firms → margin erosion

Key insight: Industry structure determines average profitability.

IT connection: Technology shifts forces — e-commerce lowers entry barriers, platforms increase buyer power through transparency.

Cold call prompts:

• "Draw Five Forces on the board and explain each."
• "Rate the forces for airlines. Which is strongest?"
• "How has the internet changed buyer power?"

---

RBV & VRIN (15 min)

Framework for firm-level advantage. What makes this firm outperform rivals?

Criterion	Question	Example
Valuable	Exploit opportunities / neutralize threats?	Zara's POS data → responds to trends faster
Rare	Do few competitors have it?	Proprietary algorithms, unique supplier relationships
Inimitable	Costly/difficult to copy?	Complex processes, tacit knowledge, path dependence
Non-substitutable	No equivalent resource?	Can't replicate with different approach

Key insight: Must pass ALL FOUR for sustainable advantage.

Why resources fail:

• Valuable but common → Competitive parity
• Rare but imitable → Temporary advantage
• Can be substituted → Alternative achieves same result

IT implication: Tech alone rarely passes VRIN. Hardware/software can be bought. The combination of tech + processes + culture + skills is hard to copy.

Cold call prompts:

• "What does VRIN stand for? Why does each matter?"
• "Is Amazon's logistics network VRIN? Test each criterion."
• "What's the difference between rare and inimitable?"

---

Value Chain (15 min)

Framework for where value is created within a firm.

┌─────────────────────────────────────────────────────────────────┐
│                     SUPPORT ACTIVITIES                          │
├─────────────────────────────────────────────────────────────────┤
│  Firm Infrastructure (finance, planning, legal)                 │
│  Human Resource Management                                      │
│  Technology Development                                         │
│  Procurement                                                    │
├─────────────────────────────────────────────────────────────────┤
│                     PRIMARY ACTIVITIES                          │
├──────────┬──────────┬──────────┬──────────┬────────────────────┤
│ Inbound  │          │ Outbound │Marketing │                    │
│ Logistics│Operations│ Logistics│ & Sales  │  Service           │
└──────────┴──────────┴──────────┴──────────┴────────────────────┘
                                                        → MARGIN

Primary: Inbound → Operations → Outbound → Marketing & Sales → Service

Support: Infrastructure, HR, Technology Development, Procurement

Key insight: Advantage comes from performing activities differently or performing different activities.

Cold call prompts:

• "Walk us through the primary activities with examples."
• "Where does IT touch the value chain? Which activities?"
• "What's the difference between Technology Development and Operations?"

---

Zara Case Application (15 min)

Five Forces for Fast Fashion

Force	Zara's Position
New Entrants	High barriers — speed requires massive vertical integration investment
Supplier Power	Low — Zara owns production
Buyer Power	Moderate — urgency ("buy now or miss out") reduces power
Substitutes	Many alternatives, but Zara's speed is unique
Rivalry	Intense — but Zara competes on speed, not price

VRIN Test for Zara's IS

Resource/Capability	V	R	I	N	Sustainable?
POS systems	✓	✗	✗	✗	No — anyone can buy
Real-time demand data	✓	✓	?	✓	Partial
2-week design-to-store	✓	✓	✓	✓	YES
Vertical integration + IS	✓	✓	✓	✓	YES

Key insight: It's the system of interconnected capabilities that's inimitable, not any single technology.

Where IS Touches Zara's Value Chain

Activity	How IS Enables It
Inbound Logistics	Supplier coordination, fabric inventory
Operations	CAD systems, automated cutting, scheduling
Outbound Logistics	Centralized distribution, 2x weekly shipments
Marketing & Sales	POS data, store manager feedback systems
Technology Development	Proprietary systems connecting all activities

Discussion prompts:

• "Which of Zara's resources truly pass VRIN? Defend your answer."
• "Why can't H&M or Gap just copy Zara's systems?"
• "Is Zara's advantage from technology or something else?"

---

Wrap-Up (5 min)

Preview Thursday:

• Position assignments posted on Canvas
• Read Carr's "IT Doesn't Matter" article
• Complete AI debate (4+ exchanges)
• Submit position paper by Wed 11:59 PM
• Come ready to defend your assigned position

---

Session 2: "Does IT Matter?" Live Debate

Time: 75 min | Date: Thu, Jan 29, 2:00 PM

Setup (10 min)

• Display pairing list on screen
• Students find their debate partner
• 2 min prep with partner to agree on ground rules

---

The Debate: Carr's Argument

"IT Doesn't Matter" (2003)

Carr's core claims:

1. IT has become ubiquitous — everyone has access
2. IT is now infrastructure (like electricity) — necessary but not differentiating
3. Spending more on IT doesn't improve performance
4. Companies should focus on cost reduction and risk management

Counter-Arguments

1. It's how you use it — execution and integration matter
2. First-mover advantages — early adopters build switching costs
3. IT enables business model innovation — platforms, data, ecosystems
4. Continuous innovation required — standing still = falling behind
5. Carr conflates hardware with capabilities — buying servers ≠ building systems

The Nuanced Position

Both sides have merit:

• Commodity IT (email, ERP, basic analytics) → Carr is right, no advantage
• Strategic IT (proprietary systems, data assets, platforms) → Differentiation possible

The real question: "Which IT matters and how?"

---

Debate Structure (30 min)

Round	Time	Format
1	10 min	Debate assigned partner
2	10 min	Rotate — find new opponent from other side
3	10 min	Final rotation OR deeper dive with current

Logistics (21 students):

• 11 "IT Does Matter" vs 10 "IT Does NOT Matter"
• 10 pairs + 1 trio (or instructor debates odd student)

Facilitation tips:

• Circulate but don't intervene
• If pair finishes early: "What about the AI industry?"
• Note strong arguments to call on during synthesis

---

Synthesis Discussion (20 min)

Opening questions:

1. "What was the strongest argument you heard from the other side?"
2. "Did anyone change their mind?"
3. "Has Carr's argument aged well since 2003? What's changed?"

Push for nuance:

• "When does IT matter? Under what conditions?"
• "Is the answer different for different industries?"
• "What about AI — does that change the calculus?"

Connect to Zara:

• "Does IT matter for Zara specifically?"
• "How would Carr respond to Zara as an example?"
• "What separates companies where IT matters from those where it doesn't?"

---

Key Synthesis Points to Hit

1. IT as commodity vs. capability — The tech itself may be commodity; how you use it isn't

2. Complementary assets matter — Technology + processes + culture + skills

3. Timing matters — First movers can build advantages before others catch up

4. Industry context matters — IT matters more in some industries than others

5. 2003 vs. 2026 — Cloud, AI, platforms have changed the equation

6. Zara's lesson — The whole system is greater than the sum of its parts

---

Wrap-Up (15 min)

Connect to frameworks:

• Five Forces: How does IT shift industry dynamics?
• RBV/VRIN: When does IT pass the test?
• Value Chain: Where does IT create the most value?

Preview Week 3:

• Case Memo #1: Zara (due end of Week 3)
• Start identifying which IS capabilities pass VRIN
• Think about what a competitor would need beyond technology

Reminders:

• Five Forces Lab due Sunday 11:59 PM
• GenAI Module 1 due end of Week 3 (self-paced)

---

Quick Reference: Common Questions

Question	Answer
"Which position is right?"	Both have merit — the answer is "it depends"
"Can I use same company for lab and project?"	Yes, encouraged
"What if I agree with the opposite position?"	Good! Defending positions you disagree with builds argumentation skills
"Did I have to agree with my assigned side?"	No, but you had to argue it convincingly

---

Supplies Checklist

• Pairing list displayed/printed
• Timer visible for debate rounds
• Whiteboard markers (for framework diagrams)
• Five Forces template handout (optional)

---

Last Updated: 2026-01-28