PRACTICUM

Where is your market now?

Diagnosis of competitive advantage, configuration of power, and the next strategic move

We have examined the pharmacy chain, distributor, manufacturer, IT infrastructure, and government. But none of these players is always and everywhere the strongest. In one market, power is concentrated among several pharmacy chains. In another, it belongs to a distributor that has built infrastructure around independent pharmacies. In a third, critical access is controlled by the government or a digital platform.

Market power often concentrates where a company controls something important to the system and difficult for other participants to replace.

Only then does it make sense to choose the next strategic move. Three questions frame the entire practicum: advantage → result → constraint.

What could devalue all the company's other capabilities?

Executive Desk Check—IT and Government

We have already seen how a company gains advantages through availability, inventory turnover, automation, warehousing, purchasing power, assortment, scale, infrastructure, and patient access. But above them are constraints of another level.

Capability answers the question “what can we do?” Constraint asks, “will the environment allow us to turn that capability into power?”

The next question: what configuration of power exists here and now?

Competitive advantage must create a measurable economic result

Growth makes sense only when the advantage is proven and withstands scale.

A capability by itself is not yet a competitive advantage. If a competitor can do the same thing with a comparable result, it is a necessary level of play, not an advantage.

PRACTICUM

Two proofs of advantage—and a separate growth check

The three checks are best read separately: differentiation, economic result, and the capability to withstand the chosen scale.

1. WE REALLY DO THIS BETTER THAN OUR COMPETITORS. Not an internal belief, but a measurable difference: higher availability, lower inventory at the same Service Level, faster replenishment, better purchasing terms, lower cost to serve, or faster technology implementation.
2. THE ADVANTAGE CREATES A MEASURABLE RESULT. More sales, higher margin or return on capital, less capital and lower costs, higher customer retention, lower risk, or greater resilience.
3. IF GROWTH IS CHOSEN—WILL THE ADVANTAGE WITHSTAND SCALE? The expansion mechanism must be clear: capital for new locations, margin for development, customer base, scaling speed, or reduced dependence on a single route.

WHAT NOT TO CONFUSE

• An advantage can be real even without growth. Growth is a separate strategic decision.
• If growth is chosen, the advantage must withstand scale: a manual service may disappear when the business doubles.
• If part of the advantage emerges only at scale, first test the basic unit economics and the mechanism for improving it.

Start by choosing three advantages

Do not fill in everything. Choose three differences that can genuinely change your company's economics.

Our advantage · Where are we better than the market? · What proves it? · Economic effect · How do you use it / what will change?

The advantage must produce a measurable economic result. Growth is one possible next move.

Three tests that are best viewed together

These questions are connected: high service without capital, a cash cycle without growth, and a broad assortment without customers do not create a sustainable advantage.

1. CHAIN / DISTRIBUTOR

   Availability Level + inventory

   What is our Availability Level—and that of the strongest competitor? How many days of inventory do we and they require at a comparable Service Level?

   CHECK: lower inventory at the same or better Service Level = capital released for growth.

2. EVERYONE

   Cash cycle

   Look beyond inventory turnover.

   Own-financing days = days of inventory + days waiting for cash − supplier payment terms. MAIN QUESTION: if sales grow by 30%, how much additional working capital will be required?

3. CHAIN / DISTRIBUTOR

   Assortment and customer patience time

   What need can the customer meet immediately, within 2–4 hours, tomorrow, in 3–4 days, or in two weeks? Virtual assortment works only within the customer's time horizon.

   CHECK: do more customers come to us because the market considers our assortment more reliable?

ONE COMMON QUESTION: does our operating model allow us to keep growing without a disproportionate increase in costs and capital?

PRACTICUM

Where does power lie in this market specifically?

Find the configuration that best describes the current system—and the dependency that will change the economics of the next decision.

1. FRAGMENTED RETAIL / STRONG DISTRIBUTOR. Power: warehouse, speed, credit, ERP/POS, pharmacy alliance. Can the distributor retain the ecosystem?
2. CONSOLIDATING CHAINS. Power: own warehouse, direct purchasing, analytics, customer traffic. How can they scale without weakening their economics?
3. VERTICALLY INTEGRATED GROUP. Power: retail + distribution + sometimes manufacturing. Which critical function is still outside its control?
4. GOVERNMENT-CONSTRAINED MARKET. Power: ownership, licensing, regulation, mandatory access. What changes if one key rule changes?
5. DIGITALLY CLOSED MARKET. Power: the ERP/POS platform controls data and integration. Who actually controls technology choices?
6. TRANSITIONAL CONTEST MARKET. Functions are actively migrating and stable dominance has not yet emerged. Which function must be captured before the market stabilizes?

Do not classify the market for the sake of an elegant framework. Find the dependency that will change the economics of the next decision.